Annual Financial Statements (Corporate and Consolidated) of 31 December 2008

Annual Report 2008

ETEM S.A. Group of Companies Annual Financial Statements (Corporate and Consolidated) of 31 December 2008 General Manager Member of the B.o.D Chairman of the B.o.D. Financial Manager DIMITRIOS CHARALABOS MARKOS PANAGIS PAVLAKIS PAPANIKOLAOU KALLERGIS STRATIOTIS ID Card No: ΑΖ 139024 ID Card No: ΑΒ 599873 ID Card No: Ξ 036869 ID Card No: Ι 139251 Reg. No 5343 GRADE A S.A. REG. NUMBER: 7777/06/Β/86/17 2-4 Mesogheion Ave., Athens

ETEM S.A. Group of Companies 2

3 Annual Report 2008 Table of Contents Ι. Balance Sheets 8 ΙΙ. Income Statements 9 ΙΙΙ. Statement of changes in Shareholders Equity 10 IV. Cash flow statements 11 Notes on the financial statements 13 1. General Information 13 2. Overview of significant accounting principles 13 2.1 Framework for the compilation of financial statements 13 2.2 Principles of consolidation and participations 18 2.3 Foreign currency conversions 18 2.4 Tangible fixed assets 19 2.5 Intangible assets 19 2.6 Impairment of assets 19 2.7 Financial assets 20 2.8 Inventories 20 2.9 Trade receivables 20 2.10 Cash and cash equivalents 20 2.11 Share capital 21 2.12 Loans 21 2.13 Taxation 21 2.14 Employee benefits 21 2.15 Grants 22 2.16 Provisions 22 2.17 Income recognition 22 2.18 Leases 22 2.19 Dividend distribution 23 3. Financial Instruments 24 3.1 Basic financial risk management instruments and accounting principles followed 24 3.2. Determining fair values 24 4. Significant accounting estimates and judgments by the management 26 5. Segment reporting 27 6. Tangible fixed assets 29 7. Intangible assets 31 8. Investment property 31 9. Investments in entities consolidated using equity method 32 10. Investments in entities consolidated using full consolidation method. 33 11. Financial assets available for sale 34 12. Deferred tax 35 13. Inventories 37 14. Trade and other receivables 38 15. Derivative instruments 40 16. Cash and cash equivalents 41 17. Share capital 41 18. Reserves 42 18.1 Fair value reserves 42 18.2 Statutory reserve 42 18.3 Special & Tax-free reserves 43 19. Borrowing 43 19.1 Finance Leasing 44 20. Provision for staff retirement indemnity 44 21. Grants 45 22. Suppliers and other liabilities 46 23. Provisions 46 24. Expenses per category 46 25. Employee benefits 47 26. Net Financial income/(expenses) 48 27. Income tax 48 28. Other income - expenses 49 29. Commitments 50 30. Contingent Liabilities Receivables 50 31. Affiliated Entities 51 32. Earnings / (Losses) per share 52

ETEM S.A. Group of Companies 4 33. Dividends per share 52 34. Management of financial risk 52 35. Tax Unaudited fiscal years 58 36. Number of employees 58 37. Events after the balance sheet date 58

5 Annual Report 2008

ETEM S.A. Group of Companies 6 Message by the General Manager Dear Shareholders and Partners, Due to the financial crisis, the 2008 fiscal year was difficult for ETEM. Many of the actions taken by the company were hindered by the crisis that emerged last August and September. One of the first consequences of the crisis was a reduction in our sales in general, and in the sales of industrial products to the rest of Europe in particular. A second direct consequence was to intensify the taking of measures for reducing working capital and loans and rationalizing our activities in sectors where profits were satisfactory. Before the end of 2008, there was also a drop in construction activity and a reduction in the demand for architectural products. By the end of the year, in accordance with the international accounting standards, we recognised additional losses both at a corporate and group level due to the devaluation of inventories resulting from a drop in the market value of aluminium. At a group level, sales amounted to 158.717 thousand with losses amounting to 15.673 thousand, compared to sales amounting to 169.013 thousand in 2007 and profits amounting to 1.105 thousand. The Group s results before interest, tax, depreciation and amortization corresponded to a loss amounting to 2.976 thousand (2007: profits amounting to 15.574 thousand). Respectively, the consolidated result included financial expenses amounting to 8.886 thousand. The devaluation of inventories amounted to 7.568 thousand, whereas other provisions and devaluations amounted to 5.589 thousand. The sales of ETEM S.A. in 2008 amounted to 101.193 thousand with losses amounting to 17.262 thousand, compared to sales amounting to 114.407 thousand in 2007 and profits amounting to 10 thousand. The company s results before interest, tax, depreciation and amortization corresponded to a loss amounting to 10.060 thousand (2007: profits amounting to 6.298 thousand). The results of the fiscal year included financial expenses amounting to 5.714 thousand. (2007: 4.450 thousand). Furthermore, the company proceeded with a devaluation of inventories amounting to 7.294 thousand and additional provisions and devaluations of fixed assets amounting to 5.085 thousand. In the second half of 2008, the company proceeded to reduce its working capital, thus resulting in the generation of positive operating cash flows both for the company, amounting to 3.133 thousand, and the Group, amounting to 9.411 thousand.. In the last six months of the year in particular, the cash flows from operating activities amounted to 10.377 thousand for the company and 13.038 thousand for the Group. In 2008 the separation of the foundry sector and its transfer to ANOXAL S.A. was completed. The assets transferred to ANOXAL S.A. amounted to 11.853 thousand, 3.328 of it being share capital. Furthermore, a decision was made for the separation of the ETALBOND sector and its transfer to ETALBOND S.A. to ensure better service to our customers; the decision is currently under implementation. The separation is expected to be completed in the first half of 2009. Works are still going on in Bulgaria for the construction of a PVC profile manufacturing plant so as to start production in the first months of 2009. Finally, works are still going on for the construction of an extrusion plant in Libya, where we are currently holding discussions with partners and collaborators. Dear Shareholders, The year 2009 is expected to be a tough year, but we firmly believe that we have taken, and are still taking, the right actions to ensure our successful presence in the market. We will keep trying to rationalize and improve the financial figures of both the company and the ETEM Group, thus reinforcing our presence in the market in an effort to provide our customers and partners with better service. Dimitris Pavlakis General Manager

7 Annual Report 2008 INVITATION To an Ordinary General Assembly of the shareholders of the société anonyme bearing the name ETEM S.A. LIGHT METAL CORPORATION, Société Anonyme» S.A. REG. NUMBER 7777/06/Β/86/17 In compliance with the Law and the Company s Articles of Association, the Board of Directors of the société anonyme ETEM, LIGHT METALS COMPANY S.A. hereby invites its shareholders to attend the Ordinary General Assembly to be held on Wednesday, 17 June 2009, at 11:30 a.m., at the PRESIDENT Hotel, 43 Kifisias Ave., Athens, to discuss and decide on the following: AGENDA 1. To approve the financial statements of 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 2008. 3. To appoint Auditors for fiscal year 2008 and set their fees. 4. To approve the fees to be paid to the members of the Board of Directors pursuant to article 24, par. 2 of Codified Law 2190/1920. 5. To appoint the members of the Board of Directors who will comprise the Audit Committee pursuant to art. 37 of Law 3693/08. 6. Various announcements. Any shareholders who wish to attend the General Assembly are required, at least five (5) days prior to the date of the Assembly, to deposit to the Company s offices, 16 Himaras Street, Marousi (tel.: 210-68 61 349, fax: 210-68 61 347), the documents certifying that their relative shares are blocked together with the powers of attorney appointing their proxies pursuant to the provisions of the Law and the Company s Articles of Association. Athens, 22 May 2008 THE BOARD OF DIRECTORS

ETEM S.A. Group of Companies 8 Ι. Balance Sheets Amounts in Euro COMPANY FIGURES ASSETS Note 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Non-current assets Tangible fixed assets 6 111.918.791 99.398.203 57.082.494 71.969.869 Intangible assets 7 839.941 273.566 194.069 211.249 Investment property 8 4.980.565 5.214.638 1.791.416 1.893.562 Investments in entities consolidated using equity method 9 1.162.807 1.127.319 612.800 686.907 Investments in entities consolidated using full consolidation method 10 - - 40.665.288 23.852.684 Available-for-sale financial assets 11 302.317 370.644 302.317 370.644 Derivatives 15-498.736-498.736 Other receivables 14 335.224 461.139 235.755 453.970 119.539.645 107.344.245 100.884.139 99.937.621 Current assets Inventories 13 58.296.528 67.914.397 28.421.530 39.671.089 Trade and other receivables 14 56.420.419 61.517.327 47.153.883 51.652.239 Receivable from income tax 27 748.452 674.766 500.972 642.797 Derivatives 15 33.883 56.213 33.883 56.213 Cash & cash equivalents 16 3.589.575 4.697.643 701.546 1.457.088 119.088.857 134.860.346 76.811.814 93.479.426 Total assets 238.628.502 242.204.591 177.695.953 193.417.047 SHAREHOLDERS EQUITY Shareholders equity attributable to shareholders Share capital 17 9.302.855 9.302.855 9.302.855 9.302.855 Share premium reserves 17 32.349.082 32.349.082 32.349.082 32.349.082 Reserves at fair value 18-270.270 18.741 24.667 91.714 Other reserves 18 19.101.477 19.056.477 17.402.606 17.357.606 Foreign exchange differences from foreign subsidiaries consolidation -3.452-175.632 - - Profits carried forward 17.948.150 34.396.610 6.214.582 24.272.293 Total 78.427.842 94.948.133 65.293.792 83.373.550 Minority interest 264.920 284.706 - - Total shareholders equity 78.692.762 95.232.839 65.293.792 83.373.550 LIABILITIES Long-term liabilities Loans 19 62.214.147 67.585.714 58.750.000 63.300.000 Liabilities from financial leasing 19.1-3.925 - - Derivatives 15 67.481-67.481 - Deferred tax liabilities 12 6.947.087 10.654.667 2.668.611 8.567.454 Liabilities for staff retirement indemnities 20 1.152.416 1.084.699 998.444 1.032.751 Grants 21 1.537.110 1.752.716 260.287 505.545 Provisions 23-122.582-373.118 71.918.241 81.204.303 62.744.823 73.778.868 Short-term liabilities Suppliers and other liabilities 22 25.672.294 22.768.322 16.946.674 16.653.226 Other tax liabilities 630.659 703.018 337.686 304.018 Loans 19 58.282.154 41.323.867 29.529.213 18.424.721 Liabilities from financial leasing 19.1 4.150 16.605 - - Derivatives 15 1.741.236 505.637 1.446.299 432.664 Provisions 1.687.006 450.000 1.397.466 450.000 88.017.499 65.767.449 49.657.338 36.264.629 Total liabilities 159.935.740 146.971.752 112.402.161 110.043.497 Total shareholders equity and liabilities 238.628.502 242.204.591 177.695.953 193.417.047 Accompanying notes are an integral part of these financial statements.

9 Annual Report 2008 ΙΙ. Income Statements Amounts in Euro Notes 12 months until 31/12/2008 12 months until 31/12/2007 12 months until 31/12/2008 COMPANY FIGURES 12 months until 31/12/2007 Sales 5 158.716.532 169.013.098 101.193.130 114.407.101 Cost of sales 24-142.526.233-138.911.593-99.059.685-98.819.273 Gross profit 16.190.299 30.101.505 2.133.445 15.587.828 Selling expenses 24-21.126.543-19.188.177-13.961.930-12.539.336 Administrative expenses 24-6.958.875-5.428.289-4.299.249-3.096.995 Other operating income (net) 28 1.141.911 2.504.470 286.486 636.697 Operating results -10.753.208 7.989.509-15.841.248 588.194 Financial expenses 26 (Β) -8.886.158-6.106.735-5.714.207-4.450.219 Financial income 26 (Α) 1.073.576 682.997 547.451 360.175 Income from dividends 28 92.601 61.020 240.954 3.859.193 Profits/(losses) from associated companies 9 & 28 115.945-60.924 - - Profits/(Losses) before taxes -18.357.244 2.565.867-20.767.050 357.343 Income tax 27 2.684.227-1.460.572 3.504.569-347.173 Net profits/(losses) of the period from continuing activities -15.673.017 1.105.295-17.262.481 10.170 Distributed to: The parent company s shareholders -15.653.232 1.169.328-17.262.481 10.170 Minority interest -19.785-64.033 - - -15.673.017 1.105.295-17262.481 10.170 Profits/(Losses) per share attributable to the parent company s shareholders for the period (presented in per share) Basic and diluted 32 (0,5216) 0,03897 (0,5752) 0,0003 Accompanying notes are an integral part of these financial statements..

ETEM S.A. Group of Companies 10 ΙΙΙ. Statement of changes in Shareholders Equity Amounts in Euro Share capital and share premium Reserves at fair value ATTRIBUTABLE TO THE PARENT COMPANY S SHAREHOLDERS Foreign Results exchange Other carried differences of reserves forward consolidation Total Minority interests Total shareholders Equity Balance as at 31 December 2006 41.651.937 884.833 18.839.795 34.956.785 54.589 96.387.939-96.387.939 - - Balance as at 1 January 2007 41.651.937 884.833 18.839.795 34.956.785 54.589 96.387.939-96.387.939 Foreign exchange differences - - - - -230.221-230.221 - -230.221 Loss recognized directly to shareholders equity - -866.092 - - - -866.092 - -866.092 Net profits/(losses) of the period - - - 1.169.329-1.169.329-64.033 1.105.296 Total recognized net profits/ (losses) of the period - -866.092-1.169.329-230.221 73.016-64.033 8.983 Share capital issue - - - - - - 348.739 348.739 Decrease in holdings in sub- - - - -12.362 - -12.362 - -12.362 sidiaries Transfer of reserves - - 216.682-216.682 - - - - Dividend - - - -1.500.460 - -1.500.460 - -1.500.460 - - 216.682-1.729.504 - -1.512.822 348.739-1.164.083 Balance as at 31 December 2007 41.651.937 18.741 19.056.477 34.396.610-175.632 94.948.133 284.706 95.232.839 0 0-1 0-0 -0 0-0 Balance as at 1 January 2008 41.651.937 18.741 19.056.477 34.396.610-175.632 94.948.133 284.706 95.232.839 Foreign exchange differences - - - - 172.180 172.180-172.180 Loss recognized directly to shareholders equity - -289.011 - - - -289.011 - -289.011 Net losses of the period - - - -15.653.231 - -15.653.231-19.786-15.673.017 Total recognized net losses of the period - -289.011 - -15.653.231 172.180-15.770.062-19.786-15.789.848 Share capital issue - - - - - - - - Decrease in holdings in subsidiaries - - - - - - - - Transfer of reserves - - 45.000-45.000 - - - - Dividend - - - -750.229 - -750.229 - -750.229 - - 45.000-795.229 - -750.229 - -750.229 Balance as at 31 December 2008 41.651.937-270.270 19.101.477 17.948.150-3.452 78.427.841 264.920 78.692.761 0 0 0 0-0 0 0 0 COMPANY FIGURES Balance as at 31 December 2006 41.651.937 839.297 18.126.606 24.993.584-85.611.424-85.611.424 - Balance as at 1 January 2007 41.651.937 839.297 18.126.606 24.993.584-85.611.424-85.611.424 Loss recognized directly to shareholders equity - -747.583 - - - -747.583 - -747.583 Net profit of the period - - - 10.170-10.170-10.170 Total recognized net losses of the period - -747.583-10.170 - -737.413 - -737.413 Transfer of reserves - -769.000 769.000 - - - Dividend - - - -1.500.461 - -1.500.461 - -1.500.461 - - -769.000-731.461 - -1.500.461 - -1.500.461 Balance as at 31 December 2007 41.651.937 91.714 17.357.606 24.272.293-83.373.550-83.373.550 Balance as at 1 January 2008 41.651.937 91.714 17.357.606 24.272.293-83.373.550-83.373.550 Loss recognized directly to shareholders equity - -67.047 - - - -67.047 - -67.047 Net losses of the period - - - -17.262.482 - -17.262.482 - -17.262.482 Total recognized net losses of - -67.047 - -17.262.482 - -17.329.529 - -17.329.529 the period Transfer of reserves - 45.000-45.000 - - - Dividend - - - -750.229 - -750.229 - -750.229 - - 45.000-795.229 - -750.229 - -750.229 Balance as at 31 December 2008 41.651.937 24.667 17.402.606 6.214.582-65.293.792-65.293.792 Accompanying notes are an integral part of these financial statements.

11 Annual Report 2008 IV. Cash flow statements Amounts in Euro 1/1 till 31/12/2008 1/1 till 31/12/2007 COMPANY FIGURES 1/1 till 31/12/2008 1/1 till 31/12/2007 Cash flows from operating activities Profits/(Losses) before taxes -18.357.244 2.565.867-20.767.050 357.343 Depreciation (notes 6, 7, 8 & 21) 7.561.332 7.224.515 5.640.808 5.525.185 Fair value of derivatives through profit and loss (note 18.1) 1.512.786-1.512.786 - Results from Investment Activity -178.133-318.890-122.766-3.933.574 Financial expenses (note 26) 6.838.820 5.271.243 5.210.850 3.834.138 Provisions (note 13, 14, 23) 11.053.650 717.347 10.106.421 668.517 Impairment of fixed assets (note 6) 825.771-825.771 - Increase in inventories 2.072.553-15.246.763 3.438.255-11.141.933 Increase in receivables 2.909.372-4.157.406 2.878.184-6.179.467 Increase/(decrease) in liabilities (excluding banks) 2.433.927-1.298.947-167.608 1.599.073 Increase in liabilities for staff retirement indemnities (note 20) 67.717 130.098 56.724 116.073 Interest paid -6.435.840-5.076.685-5.206.137-3.639.578 Tax paid -893.312-1.384.889-273.250-925.828 Net cash flows from operating activities 9.411.399-11.574.510 3.132.988-13.720.051 Cash flows from investment activities Purchase of tangible & intangible assets (note 6, 7) -21.630.249-12.902.248-5.284.763-6.163.594 Sale of tangible & intangible assets 163.367 65.116 365.513 324.705 Sale of holdings 0 49.000-49.000 Dividends received 92.601 61.020 227.601 6.664.886 Changes in other financial assets 0 - - - Interest received (note 26) 124.618 269.795 7.644 25.381 Increase in holdings in companies -89.915 - -4.946.034-3.873.089 Purchase of minority interest in subsidiary 0-12.362 - - Grants received 0 1.423.036 - - Other 0 - -62.754 - Net cash flows for investment activities -21.339.578-11.046.643-9.692.793-2.972.711 Cash flows to/from financing activities Dividends paid -750.229-1.500.461-750.229-1.500.461 Participation of minority shareholders in a newly-established subsidiary 0 348.739 0 0 Long-term loans taken out 20.000.000 31.824.530 20.000.000 30.000.000 Long-term loan repayment -18.671.567-12.457.143-17.850.000-11.600.000 Net change in short-term loans 10.258.287 4.084.983 4.404.492-2.274.865 Changes in leasing capital -16.380-57.120 0 0 Net cash flows from financing activities 10.820.111 22.243.528 5.804.263 14.624.674 Net increase/(decrease) in cash and cash equivalents -1.108.068-377.625-755.542-2.068.088 Cash at beginning of period 4.697.643 5.075.268 1.457.088 3.525.176 Cash at end of period 3.589.575 4.697.643 701.546 1.457.088 Accompanying notes are an integral part of these financial statements.

ETEM S.A. Group of Companies 12

13 Annual Report 2008 Notes on the financial statements 1. General Information The financial statements contained herein include the corporate financial statements of ETEM S.A. (the Company ) and the consolidated financial statements of the Company and its subsidiaries (the Group ). The company names of the company s subsidiaries are presented in Note 10 of the financial statements The present financial statements are subject to the approval of the company s Ordinary General Assembly, which is expected to take place in June 2009. The Group is primarily active in the production and sale of architectural and industrial aluminium profiles and in the production of composite panels (Etalbond). The Group is mainly active in Greece and in the broader region of the Balkans and Europe. The Company s shares are traded on the Athens Stock Exchange. The Company is seated in Greece, 2-4 Mesogheion Ave., Athens Tower, B Building, Athens. The Company s URL is www.etem.gr. The attached financial statements were approved for publication by the company s Board of Directors on 27/03/2009. The parent company is ELVAL S.A., whose shares are traded on the Athens Stock Exchange. Both the Company and ELVAL S.A. belong to the VIOHALCO S.A. Group. The direct and indirect participation of ELVAL S.A. in ETEM S.A. at 31 December 2008 was 58,78% (2007: 58,68%). 2. Overview of significant accounting principles 2.1. Framework for the compilation of financial statements The attached financial statements of the Company concern the fiscal year that ended on 31 December 2008 and have been prepared according to the International Financial Reporting Standard (IFRS). Pursuant to European Legislation 1606/2002 and Law 3229/04 (as this has been amended by Law 3301/04), Greek companies that are listed on any stock exchange (domestic or international) are obligated to prepare their institutional financial statements for fiscal years that begin from 1 January 2005 and thereafter according to the IFRS. These financial statements have been prepared according to the historical cost principle (excluding property, plant and important mechanical equipment, which, at the date of transition to the IFRS, were valued at their fair values, which were used as a deemed cost on the aforementioned date, and excluding derivatives, which are valued at their fair values). Preparation of financial statements based on the IFRS requires the use of certain important accounting estimates and the exercise of judgment on behalf of the Management during the application of accounting policies. In addition, it requires the use of calculations and assumptions that affect the aforementioned asset and liability figures, the disclosure of contingent receivables and liabilities on the date the financial statements are prepared and the aforementioned income and expense figures during the said year. Despite the fact that these estimates are based on the Management s best possible knowledge of current conditions and actions, actual results may differ from these estimates. Areas that contain a great degree of subjectivity and are complex or the assumptions, or estimates that are important for the financial statements are referred to in Note 4. The accounting principles that have been adopted are consistent with those of the previous year, with the exception of the following: The following new Interpretations are mandatory for the first time in the accounting period starting on 1 January 2008 and had o effect on the financial statements: Interpretation 11, IFRS 2 Group and Treasury Share Transactions. Interpretation 11 requires that the accounting treatment of transactions in which an entity s employees are granted rights to the entity s equity instruments must be that of a remuneration specified by the value of equity-settled shares, even in the case where the company chooses or is required to purchase these equity instruments from third parties or the shareholders of the company offer these instruments. The Interpretation also includes the way subsidiaries handle, in their separate financial statements, plans where employees are granted rights on equity instruments of the parent company. Interpretation 11 applies to the Group as regards how to handle, in their separate financial statements prepared by subsidiaries, plans where employees are granted rights on the Company s shares. Interpretation 12, Service Concession Arrangements. Interpretation 12 addresses how service concession operators should apply existing IFRS to account for the liabilities they undertake and the rights they receive in the relevant service concession agreements. Based on the Interpretation, service concession operators should not recognize the relevant infrastructure as tangible assets, but recognize a financial asset and/or an intangible asset. Interpretation 12 has no application to the Group. Interpretation 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. Interpretation 14 provides guidance on how to assess the limit on the amount of the surplus that can be recognized as asset in a defined benefit plan pursuant to IAS 19 Employee Benefits. It also explains how this limit can be affected when there is a legal or contractual minimum funding requirement, and it standardises the existing practice. The Group does not have any defined benefit plans.

ETEM S.A. Group of Companies 14 Amendments to IAS 39 Financial instruments: Recognition and Measurement and IFRS 7 Financial instruments: Disclosures, apply from 1 July 2008. This amendment to IAS 39 would permit an entity to reclassify some non-derivative financial instruments (save those classified by the entity in the fair value category in profit or loss at initial recognition) out of the category of fair value through profit or loss under specific circumstances. The amendment also allows an entity to transfer a financial asset from the held for sale category to the loans and receivables category which could satisfy the requirements for being defined as loans and receivables (if it were not classified as held for sale) provided that the entity intends and can retain the said financial asset in the near future. This amendment does not permit reclassification in the fair value category through profit or loss. The amendment refers to disclosures of financial assets that have been reclassified. The Group does not expect this amendment to have an effect on its financial statements. The above new standards, amendments/revisions of the standards or interpretations have been issued but do not apply in the accounting period starting on 1 January 2008 and will not be applied by the group/company earlier: Interpretation 13, Customer Loyalty Programs, applies to annual accounting periods beginning on or after 1 July 2008. Interpretation 13 requires that loyalty award credits are accounted for as a separate part of a sales transaction by way of which they are granted and, therefore, a part of the fair value of the sales consideration is allocated to such credits and is posted in the period during which such credits are redeemed. The Group does not expect that this Interpretation will have any effect on its financial statements since the Group does not implement any such programmes. Interpretation 15 Agreements for the Construction of Real Estate, applies to annual accounting periods beginning on or after 1 January 2009. Interpretation 15 provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and when revenue from the construction should be recognised. The interpretation has retrospective effect. The European Union has not adopted this interpretation yet. Interpretation 15 is not expected to have an effect on the Group s financial statements since the Group applies IAS 18, not IAS 11, to all its revenue transactions. Interpretation 16 Hedges of a net investment in a foreign operation applies to annual accounting periods beginning on or after 1 October 2008. This interpretation clarifies that: The presentation currency of the Financial Statements does not create an exposure to which the company may apply hedge accounting. Consequently, a parent entity may designate as a hedged risk only the foreign exchange differences arising from a difference between its own functional currency and that of its foreign operation. Any Group company may hold hedging instruments. While IAS 39 Financial Instruments: Recognition and Measurement must be applied to determine the amount that needs to be reclassified to profit or loss from the foreign currency translation reserve in respect of the hedging instrument, IAS 21 The Effects of Changes in Foreign Exchange Rates must be applied in respect of the hedged item. The interpretation will take effect in the future. The European Union has not adopted this interpretation yet. The Group is currently reviewing the effect of this interpretation on its Financial Statements. Interpretation 17 Distributions of non-cash assets to owners applies to annual accounting periods beginning on or after 1 July 2009. This interpretation clarifies that: a dividend payable should be recognised when the dividend is appropriately authorised and is no longer at the discretion of the entity; the company should measure the dividend payable at the fair value of the net assets to be distributed; the company should recognise the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss; and the company should provide additional disclosures if the net assets being held for distribution to owners meet the definition of a discontinued operation. Interpretation 17 applies to pro rata distributions of non-cash assets except for common control transactions. The interpretation will take effect in the future with earlier application being encouraged. The European Union has not adopted this interpretation yet. The Group is currently reviewing the effect of this interpretation. Interpretation 18 Transfers of assets from customers applies to annual accounting periods beginning on or after 1 July 2009. The interpretation is particularly relevant for the utility sector. It clarifies the accounting treatment of agreements in which an entity receives from a customer an item of property, plant and equipment (or cash which must be used to construct such property, plant or equipment) that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services. This interpretation will take effect in the future, however limited retrospective effect is allowed. The European Union has not adopted this interpretation yet. The Group is currently reviewing the effect of this interpretation. Amendments to IFRS 2 Share-based payment transactions apply to annual periods beginning on or after 1 January 2009. The amendment clarifies two issues: The definition of vesting condition by introducing the term non-vesting condition for conditions that do not fall under service or performance conditions. Moreover it is clarified that all cancellations, either arising from the entity or from the contracting parties, must receive the same accounting treatment. The Group does not expect this Interpretation to have an effect on its financial statements.

15 Annual Report 2008 Amendment to IAS 39 Financial instruments: Recognition and measurement and Interpretation 9, «Reassessment of embedded derivatives», applies to annual accounting periods ending on or after 30 June 2009. The amendment clarifies the accounting treatment of embedded derivatives for entities that make use of the reclassification amendment issued by the IASB in October 2008. The reclassification amendment allows entities to reclassify particular financial instruments out of the at fair value through profit and loss category in specific circumstances. The above amendments to Interpretation 9 and IAS 39 clarify that on reclassification of a financial asset out of the at fair value through profit or loss category all embedded derivatives have to be assessed and, if necessary, separately accounted for in financial statements. The amendments are mandatory and have retrospective effect. The Group does not expect this amendment to have an effect on its financial statements. The European Union has not adopted this amendment yet. Amendments to IFRS 1, First-time application of the international financial reporting standards and IAS 27 Consolidated and separate financial statements apply to annual accounting periods beginning on or after 1 January 2009. The amendment to IFRS 1 allows an entity to measure the cost of an investment in subsidiaries, jointly controlled entities or associates in the initial financial statements in accordance with IAS 27 or using the deemed cost. The amendment to IAS 27 requires all dividends form subsidiaries, jointly controlled entities and associates are recognized to be recognised in profit or loss in the separate financial statements. The amendment to IAS 27 will take effect in the future, but not retrospectively. Such new amendments shall have an effect on the separate financial statements of the parent company, but shall have no effect on the financial statements of the Group. The Group does not expect this amendment to have an effect on its financial statements. Revised IFRS 3 Business Combinations and Amended IAS 27 Consolidated and Separate Financial Statements apply to accounting periods beginning on or after 1 July 2009. On 10 January 2008, the International Accounting Standards Board (IASB) published the revised IFRS 3 Business Combinations and the Amended IAS 27 Consolidated and Separate Financial Statements. Revised IFRS 3 introduces a series of changes in the accounting treatment of business combinations which will affect the amount of the recognized goodwill, the results of the period during which business combination takes place and the future results. As part of these changes, the costs related to the acquisition are expensed and future changes are recognized at the fair value of the contingent consideration in results (instead of goodwill adjustment). Amended IAS 27 requires that any transactions leading to changes in holding percentages in a subsidiary are posted in equity. Therefore, they neither affect goodwill nor generate any result (profit or loss). In addition, the amended Standard changes the way in which subsidiaries losses and the loss of control over a subsidiary are accounted for. The European Union has not adopted the revised IFRS 3 and the amended IAS 27 yet. All changes of the above standards will be implemented as of their application date and will affect future acquisitions and transactions with minority shareholders as of such date and thereafter. IFRS 8 Operating segments applies to annual accounting periods beginning on or after 1 January 2009. IFRS 8 replaces IAS 14 Segment Reporting and adopts a management approach to segment financial reporting. The information provided must be the one the management uses internally to evaluate the segment performance and allocate resources to operating segments. Such information may be different from what is used to prepare the balance sheet and income statement, and entities must provide explanations and agreements regarding such differences. The Group is in the process of evaluating the effect of this standard on its financial statements. Amendment to IFRS 7 Financial instruments: Disclosures, applies to annual accounting periods beginning on or after 1 January 2009. This amendment requires fair value measurement disclosure to be based on a three-level hierarchy: (a) Quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1); (b) Directly (prices) or indirectly (resulting from prices) observable inputs relating to assets and liabilities, other than those included in Level 1 (Level 2); (c) Inputs relating to assets and liabilities that are not based on observable market data (non-observable inputs) (Level 3). Such reporting shall be provided for each category of financial instruments. The amendment requires an amendment to the minimum defined liquidity risk disclosures. The Group does not expect this amendment to have an effect on its financial statements. The European Union has not adopted this amendment yet. Amendments to IAS 1 Presentation of Financial Statements apply to annual accounting periods beginning on or after 1 January 2009. IAS 1 has been amended to upgrade the usefulness of the information presented in financial statements. Following are some of the most important amendments: it is required that the statement of changes in equity includes only transactions with shareholders; a new statement of comprehensive income is introduced which combines all profits and losses recognized in the income statement with other income (comprehensive income); and it is also required that the restatements in financial statements or retrospective applications of new accounting policies are presented as at the beginning of the earliest comparative period, namely in a third column in the balance sheet. The Group will make all necessary changes to the presentation of its financial statements for 2009. Amendments to IAS 32 Financial instruments: Presentation and IAS 1 Presentation of Financial Statements as regards Financial instruments held by owner (or puttable instrument) apply to annual accounting periods beginning on or after 1 January 2009. The amendment requires that certain financial instruments held by their owner (puttable instruments) and liabilities arising from the liquidation of an entity are posted as Equity if specific criteria are met. The amendment to IAS 1 requires the disclosure of information relating to puttable instruments classified as Equity. The Group expects that these amendments will not affect its financial statements. Amendments to IAS 23 Borrowing costs apply to annual accounting periods beginning on or after 1 January 2009. According to the amendments to IAS 23, the option (available under the existing standard) of immediately recognising as a period expense borrowing costs that relate directly to a qualifying asset is removed. All borrowing costs that are directly related to the acquisition, manufacture or production of a qualifying asset should be capitalised. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for the intended use or for sale. Pursuant to the interim provisions of the Standard, the Group will adopt the change as of its application date and thereafter. Therefore, borrowing costs related to qualifying assets are capitalized when capitalisation commences on or after 1 January 2009. Any borrowing costs posted to results prior to this date will not be readjusted.

ETEM S.A. Group of Companies 16 Amendment to IAS 39 Financial instruments: Recognition and measurement, applies to annual accounting periods beginning on or after 1 January 2009. The amendment provides guidance on what can be designated as a hedged portion, and in particular on the designation of a one-sided risk in a hedged item, and the designation of inflation as hedged, or even partially hedged, risk in particular situations. It clarifies that an entity is allowed to designate part of the changes in fair value or the change in the cash flows of a financial instrument as a hedged item. The European Union has not adopted this amendment yet. The Group has concluded that this amendment will not have an effect on its financial statements, since it has not done any hedging of that type. In May 2008, the IASB issued a series of amendments to the IFRS in order to eliminate inconsistencies and provide clarifications. These amendments apply to accounting periods beginning on or after 1 January 2009 and have not been adopted by the European Union yet. Amendments to IFRS 5 Non-current assets held for sale and Discontinued Operations apply to annual accounting periods beginning on or after 1 July 2009. This amendment clarifies that all assets and liabilities of a subsidiary still fall under the held-for-sale category pursuant to IFRS 5 even if the company retains a non-controlling interest in its former subsidiary after the sale. The amendment will take effect in the future, from the first-time application of the IFRS 5. Therefore, holdings in subsidiaries classified as held for sale as of the application of IFRS 5 must be reassessed. Early application of the amendment is accepted. In the case of early application, the amendments to IAS 27 (as amended in January 2008) must also be implemented on the application date of the amended IFRS 5. Amendments to IFRS 7 Financial instruments: Disclosures apply to annual accounting periods beginning on or after 1 January 2009. This amendment abolishes reference to total interest income as component of financial expenses. Amendments to IAS 1 Presentation of Financial Statements apply to annual accounting periods beginning on or after 39 January 2009. The amendment clarifies the assets and liabilities classified as held for trading, pursuant to IAS 39 Financial Instruments: Recognition and measurement, are not automatically classified as short-term items in the balance sheet. This amendment has retrospective effect with earlier application being encouraged. Amendments to IAS 8 Accounting policies, changes in accounting estimates and errors apply to annual accounting periods beginning on or after 1 January 2009. The amendment clarifies that only the instruction of application, which is considered an integral part of an IFRS, is compulsory when choosing accounting policies. Amendments to IAS 10 Events after the Balance Sheet Date apply to annual accounting periods beginning on or after 1 January 2009. The amendment clarifies that any dividends approved after the balance sheet date are not considered liabilities. Amendments to IAS 16 Property, plant and equipment apply to annual accounting periods beginning on or after 1 January 2009. It replaces the term Net selling price with the term Fair value less the costs to sell with respect to the recoverable amount so that consistency with IFRS 5 and IAS 36 is ensured. Property, plant and equipment held for rental to others and intended for sale in the ordinary course of business after the expiry of rental period are transferred to Inventories upon expiry of such period and are classified in held-for-sale assets. Collections from subsequent sale are recognized as income. At the same time, IAS 7 Statements of cash flows is amended and requires that payments of cash for the construction or acquisition of the relevant fixed assets are classified as Operating Activities. In addition, collections of rental fees and subsequent sales of the relevant fixed assets are recognized in the category of Operating Activities. Amendments to IAS 18 Revenue apply to annual accounting periods beginning on or after 1 January 2009. The amendment replaces the term Direct costs with the term Cost of transactions as specified in IAS 39. Amendments to IAS 19 Employee benefits apply to annual accounting periods beginning on or after 1 January 2009. It revises the definition of Past service cost so as to include reduced benefits for employee service in prior periods ( negative past service cost ) and exclude any decrease in benefits for employee service in future periods arising as a result of changes to benefit plan. Amendments to benefit plans entailing a reduction in benefits for employee service in future periods are considered plan curtailments. The amendment shall take effect in the future for changes in benefits taking place on or after 1 January 2009. Earlier application is encouraged. It revises the definition of the Return on plan assets less any costs of administering the plan unless they have already been included in the actuarial assumptions used to measure the defined-benefit obligations. This amendment has retrospective effect with earlier application being encouraged. It revises the definition of short-term and other long-term benefits to employees so as to focus on the point when the liability will be settled. This amendment has retrospective effect with earlier application being encouraged. It abolishes reference to contingent liabilities so as to be in line with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. IAS 37 does not allow recognition of contingent liabilities. This amendment has retrospective effect with earlier application being encouraged. Amendments to IAS 20 Accounting for government grants and Disclosure of government assistance apply to annual accounting periods beginning on or after 1 January 2009. Loans granted at a nil or below-market rate of interest will not be exempted from the requirement to present imputed rate. The imputed rate of subsidized loans will be lower than market rate and will thus be harmonized with IAS 39. The difference between the amount collected and the discounted amount is accounted for as government grant. The amendment will apply in the future to government grants collected on or after 1 January 2009. Earlier application is encouraged. However, IFRS 1 First-time application of IFRS has not been revised for the new users of standards and thus imputed rate must be recognized in all the relevant loans that were outstanding on transition date.

17 Annual Report 2008 Amendments to IAS 23 Borrowing cost apply to annual accounting periods beginning on or after 1 January 2009. The amendment revises the definition of borrowing costs so as to bring together all components of borrowing costs into one; interest expense is calculated pursuant to the effective rate method as described in IAS 39. The amendment has retrospective effect with earlier application being encouraged. Amendments to IAS 27 Consolidated and separate financial statements apply to annual accounting periods beginning on or after 1 January 2009. In case a parent company assesses a subsidiary at fair value pursuant to IAS 39 in its separate financial statements, this treatment shall survive even in case the subsidiary is subsequently classified as held for sale. The amendment will take effect in the future, from the first-time application of the IFRS 5. Therefore, any subsidiaries classified as held for sale as of the application of IFRS 5 must be reassessed. Earlier application is encouraged. Amendments to IAS 28 Investments in associates apply to annual accounting periods beginning on or after 1 January 2009. In case an associate is measured at fair value pursuant to IAS 39 (insofar as it has been exempted from the requirements of IAS 28), only the requirements of IAS 28 on the disclosure of the nature and extent of significant restrictions on the capacity of the associate to transfer funds to the company in the form of cash or loan repayment shall apply. This amendment has retrospective effect although future application is also permitted. Earlier application is encouraged. In the case of earlier application, the company should also adopt the following amendment and the amendment of paragraph 3 of IFRS 7 Financial instruments: Disclosures, paragraph 1 of IAS 31 Interests in Joint Ventures and paragraph 4 of IAS 32 Financial instruments: Presentation. In order to test impairment, investment in an associate is considered unique asset including any reversal of impairment loss. Therefore, in case of impairment no separate allocation of impairment to the goodwill included in the remainder of investment is required. An impairment loss shall be reversed if the recoverable amount of the investment in an associate is increased. In the case of earlier application, the company should also adopt the following amendment and the amendment of paragraph 3 of IFRS 7 Financial instruments: Disclosures, paragraph 1 of IAS 31 Interests in Joint Ventures and paragraph 4 of IAS 32 Financial instruments: Presentation. Amendments to IAS 29 Financial Reporting in Hyperinflationary economies apply to annual accounting periods beginning on or after 1 January 2009. This amendment revises the restrictive list of exemptions regarding the asset and liability items measured at historical cost, e.g. property, plant and equipment. No special requirements on transition are indicated given that the amendment is rather a clarification than a change. Amendments to IAS 31 Interests in Joint Ventures apply to annual accounting periods beginning on or after 1 January 2009. This amendment specifies that if a joint venture is measured at fair value pursuant to IAS 39 (insofar as it has been exempted from the requirements of IAS 31), only the requirements of IAS 31 on the disclosure of obligations of both venturer and joint venture as well as on the summary of financial information about balance sheet items and results shall apply. Earlier application is encouraged. In the case of earlier application, the company should also adopt the amendment of paragraph 3 of IFRS 7 Financial instruments: Disclosures, IAS 28 Investments in Associates and paragraph 4 of IAS 32 Financial instruments: Presentation. Amendments to IAS 34 Presentation of Financial Statements apply to annual accounting periods beginning on or after 1 January 2009. The amendment clarifies that earnings per share are disclosed in interim financial reporting in case the company falls under the scope of IAS 33. Amendments to IAS 36 Impairment of assets apply to annual accounting periods beginning on or after 1 January 2009. This amendment clarifies that when the method of discounted cash flows is used in order to calculate the fair value less the costs to sell, the same disclosures shall apply as for the use of discounted cash flows in order to calculate the value in use. This amendment has retrospective effect with earlier application being encouraged. Amendments to IAS 38 Intangible assets apply to annual accounting periods beginning on or after 1 January 2009. Advertising and promotional activities expenses are recognized as expenses when the company gains access to the goods or receives the services. This amendment has retrospective effect with earlier application being encouraged. It abolishes reference to the rare occasions that persuasive evidence exists to support an amortization method for intangible assets with finite useful lives that results in a lower amount of accumulated amortization than under the straight-line method, thus allowing the use of the unit of production method. This amendment has retrospective effect with earlier application being encouraged. An advance payment may be recognized only if the payment has been made prior to acquiring access to the goods or reception of services. Amendments to IAS 39 Financial instruments: Recognition and measurement apply to annual accounting periods beginning on or after 1 January 2009. It specifies that changes in circumstances relating to derivatives --in particular derivatives recognized or derecognized as hedge accounting instruments following their initial recognition-- are not considered reclassifications. Thus, a derivative may be reclassified or included in the category of fair value through profit or loss following initial recognition. Likewise, when financial assets have been reclassified due to changes in the accounting policy of an insurance company pursuant to paragraph 45 of IFRS 4 Insurance contracts, this is a change in circumstances rather than reclassification. This amendment has retrospective effect with earlier application being encouraged. It abolishes the reference of IAS 39 to the term segment when recognizing an instrument as hedge accounting item. This amendment has retrospective effect with earlier application being encouraged.

ETEM S.A. Group of Companies 18 It requires the use of revised effective rate (as opposed to the initial effective rate) when re-determining a debt security once the fair value hedge accounting ceases. This amendment has retrospective effect with earlier application being encouraged. Amendments to IAS 40 Investment property apply to annual accounting periods beginning on or after 1 January 2009. It revises its scope (and the scope of IAS 16) as regards the property under construction or development for future use as an investment property and includes it in the category of investment property. In case the company is not able to determine the fair value of the investment property under construction but expects to determine it upon completion, the said property under construction will be measured at cost until the time it will be possible to determine fair value or construction will be completed. This amendment has retrospective effect with earlier application being encouraged. An entity may apply the relevant amendment at any date prior to 1 January 2009 if the fair values of the investment properties under construction can be determined on the specific application date. It revises the conditions of voluntary change in accounting policy so as to be consistent with IAS 8. It specifies that the book value of an investment property that is leased is equal to its latest valuation increased by any recognized obligation. 2.2 Principles of consolidation and participations (a) Subsidiary companies Subsidiary companies are companies over which the Group exercises control, directly or indirectly. Subsidiary companies are fully consolidated (full consolidation) from the day control over them is acquired and cease to be consolidated from the day this control is no longer exercised. Buy-outs of subsidiary companies by the Group are accounted for based on the buy-out method. The acquisition cost of a subsidiary company is the fair value of the assets that were acquired, of the shares that were issued and of the liabilities that were undertaken on the day the transaction was effected, plus any cost that is directly associated with the transaction. The identifiable assets, liabilities and contingent liabilities that are acquired in a business combination are measured at the time of the buy-out at their fair values regardless of the holding percentage. The buy-out cost that exceeds the fair value of the identifiable net assets that were acquired is recorded as goodwill. If the total buy-out cost is less than fair value of the individual items that were acquired, the difference is recorded directly in the results. Intra-Group transactions, balances and unrealized profits that arise from transactions between the Group s companies are deleted. Unrealized losses are also deleted, but are taken into consideration as an indication of the transferred asset s impairment. The accounting principles that are applied by the Group s subsidiary companies have been adjusted, wherever this was deemed necessary, so that they are consistent with those that have been adopted by the Group. (b) Associated companies Associate companies are companies over which the Group exercises significant influence, but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associated companies are accounted for according to the equity method and are initially recognized at their acquisition cost. The amount in which investments in associate companies are recorded includes the goodwill that arises on acquisition (net of any impairment losses). The company records its investments in associated companies at their acquisition value less any impairment. 2.3. Foreign currency conversions (a) Functional currency and presentation currency The figures recorded in the financial statements of the Group s companies are measured based on the currency of the primary economic environment in which each company operates ( functional currency ). The consolidated financial statements are expressed in Euro, which constitutes both the parent company s functional currency and presentation currency. (b) Transactions and balances Transactions that are carried out in a foreign currency are converted to the functional currency with the use of the exchange rates that apply on the day each transaction is carried out. Profits and losses from foreign exchange differences that arise from the settlement of such transactions and from the conversion of monetary items that are expressed in a foreign currency with the foreign exchange rates that apply on the balance sheet date are recorded in Income Statement. (c) The Group s companies The figures recorded in the financial statements of the Group s companies (none of which operated in a hyperinflation economy on 31 December 2008) that are expressed in a different functional currency from the Group s presentation currency, are converted as follows:

19 Annual Report 2008 i. Assets and liabilities are converted at the closing rate at the balance sheet date, ii. Income and expenses are converted based on the period s average exchange rate, unless the average exchange rate is not a reasonable estimation of the accumulated effect of the exchange rates that were applicable on the day the transactions were carried out, in which case income and expenses are converted based on the actual exchange rates that were applicable on the day the transactions were carried out, and iii. Any foreign exchange difference that may arise is recorded in a shareholders equity reserve account and transferred to the results when these companies are sold. In the consolidated financial statements, foreign exchange differences that arise from the conversion of a net investment in a foreign company are recognized in shareholders equity. Upon the sale of a foreign company, accumulated foreign exchange differences are transferred to the results as part of the sale s profit or loss. Goodwill and readjustments of fair values that arise from the buy-out of a foreign company are recognized as the foreign company s assets and liabilities and are converted based on the exchange rates that apply on the balance sheet date. 2.4 Tangible fixed assets Tangible fixed assets are estimated at acquisition cost less accumulated depreciation and impairment. The acquisition cost includes all expenditures that are directly associated with the acquisition of tangible fixed assets. As cited in Note 2.1, the Company valuated fields, buildings and mechanical equipment at their fair values on 1 January 2004, which were used as a deemed cost on the date of transition to the IFRS. Expenditures that are incurred after the purchase of a tangible fixed asset are recorded either as an increase in the asset s book value or as a separate fixed asset, only if it is deemed that the Group may obtain future financial gains higher than those initially expected pursuant to the asset s initial performance and provided that the asset s cost may be reliably estimated. Repair and maintenance costs are recorded in the Income Statement when these are incurred. Land is not depreciated. Other tangible fixed assets are depreciated based on the straight line method using equal annual charges over their remaining useful lives, so as to delete cost at its residual value. The expected useful life of assets is as follows: Buildings Machinery technical facilities and other mechanical equipment Motor vehicles Telecommunications equipment Other equipment 20-33 years 5-17 years 4-6 years 4-6 years 5-7 years The residual values and useful lives of tangible fixed assets are subject to review and adjustment on every balance sheet, if necessary. When the book value of a tangible fixed asset exceeds its recoverable value, the difference (impairment loss) is immediately recorded in the Income Statement. During the sale of a tangible fixed asset, any difference that may arise between the price that is received and the book value thereof is recorded in results as a profit or loss. Investments in real estate are recorded at their acquisition cost and are valuated at cost less the corresponding depreciation and any possible impairment. During the periods noted herein no impairment was necessary. The reasonable values of these real estates, as of 31 December 2008, do not differ significantly from the value noted in the balance sheet based on the Management s estimations. 2.5 Intangible assets Software Software licenses are estimated at their acquisition cost, less accumulated depreciation and less any accumulated impairment. These assets are depreciated based on the straight line method during their useful lives, which ranges between 3 to 5 years. Expenditures that are required for the maintenance of software programs are recognized as expenses in the Income Statement in the year they are incurred. 2.6 Impairment of assets Assets that have an indefinite useful life are not depreciated, but are subject to an impairment test on an annual basis and when certain facts indicate that their book value may not be recoverable. Assets that are depreciated are subject to an impairment test when there are indications that their book value will not be recovered. The recoverable value is the higher amount between an asset s fair value (where it can be estimated reliably), less the required cost of sale, and the value in use. Impairment losses are recorded in the Income Statement as an expense in the year in which they arise.

ETEM S.A. Group of Companies 20 2.7 Financial assets Financial assets of the Group are classified in 4 categories. The classification is made in accordance with the aim for which the asset was acquired. The Group s management decides on the investment s classification at the time the investment was initially recognised and reexamines its designation at every publication date. (a) Financial assets measured at fair value through profit and loss This category includes financial assets that were acquired in order to be resold in the short-term. Financial assets in this category are classified as current assets if they are held for commercial purposes or if they are expected to be sold within 12 months of the balance sheet date. (b) Loans and Receivables This category includes non-derivative financial assets with fixed or defined payments, which are neither traded in active markets nor intended to be sold. These financial assets are recorded in current assets, with the exception of those financial assets that have a term greater than 12 months after the balance sheet date. These latter assets are recorded in a non-current asset account. (c) Held-to-maturity investments This category includes non-derivative financial assets with fixed or defined payments and with a specific maturity, which the Group intends and has the capacity to hold until their maturity. During the year, the Group did not hold any investments of this category. (d) Financial assets available for sale This category includes non-derivative financial assets that are either classified in this category or cannot be classified in any of the aforementioned categories. These assets are recorded as non-current assets provided management does not intend to dispose of them within 12 months of the balance sheet date. The purchase and sale of an investment is recognized on the day the transaction is carried out, which is also the day on which the Group is committed to purchase or sell the asset. Investments are initially recorded at their fair value plus any expense associated with the transaction. Investments are derecognised when the right to collect the cash flows arising therefrom expires or have been transferred and the Group has substantially transferred all the risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value and unrealised gains or losses are recognised in shareholders equity until they are sold or impaired. With regard to financial assets available for sale that are depicted in the Group s financial statements, these are valuated at cost less any impairment, because they are not traded in an active market and their fair value cannot be reliably determined. When these assets are sold or impaired, the profit or loss is transferred to the income statement. Impairment losses that have been recognized in the results may not be reversed through the results for these financial assets (participations). Loans and receivables are recognized at their non depreciated cost based on the effective interest rate method. (e) Derivative financial instruments It includes future contracts used to cover the financial risk arising from the change in aluminium price, and interest rate swaps to cover the risks of the company s future cash flows from interest rate changes. The results from the settled operations of financial risk management are recorded in income statement when they are realized (difference of interest on interest rate swap contracts and stock market results on aluminium contracts). The Group regularly examines the effectiveness of its cash flow hedging policy on a commercial as well as accounting basis, and records in equity the valuation result of open positions at every balance sheet date, for the part that is deemed effective. 2.8 Inventories Inventories are stated at the lower between acquisition cost and net realisable value. The cost is determined based on the annual average weighted cost method. Borrowing costs are not included in the acquisition cost. The net realisable value is estimated based on the inventory s current sales price, in the ordinary course of business activities, less any possible selling expenses, whenever such a case occurs. 2.9 Trade receivables Receivables from clients are initially recorded at their fair value and are subsequently estimated at using the real interest rate method, less any impairment loss. Impairment losses are recognised when there is an objective indication that the Group is not in a position to collect all the amounts that are due pursuant to the relative contractual terms. The amount of the allowance is equal to the difference between the book value of the receivables and the present value of the estimated future cash flows, discounted at the effective interest rate. The impairment loss is recorded as an expense in the Income Statement. 2.10 Cash and cash equivalents Cash and cash equivalents include cash in hand, sight deposits and short-term highly liquid low-risk investments with a maturity up to 3 months. Bank overdrafts are shown in liabilities as short-term loan liabilities.

21 Annual Report 2008 2.11 Share capital Ordinary shares are included in shareholders equity. Direct expenses that are associated with the issue of shares are recorded, after the relative income tax has been deducted, as a reduction to the proceeds. Direct expenses relating to shares that have been issued for the acquisition of a company are included in the acquisition cost thereof. 2.12 Loans Loans are initially recorded at their fair value, net of any direct expenses that are required in order to complete the transaction. They are subsequently stated at their unamortized cost based on the effective interest rate method. Any difference between the amount that has been collected (net of relative expenses) and the settlement value is recorded in the income statement during the term of the loan based on the real interest rate method. Loans are classified as current liabilities unless the Group has the right to defer the settlement thereof for at least 12 months from the balance sheet date. Interest charges relative to loans are recorded directly in the income statement of the period they concern, even if they concern the construction period of fixed assets. 2.13 Taxation Income tax is calculated according to the tax legislation and the tax rates in effect in the countries where the Group s activities take place and is booked as an expense during the period that income is realized. Deferred income tax is determined with the method of liability that arises from temporary differences between the book value and the tax base of assets and liabilities. Deferred income tax is not calculated if it is clear from initial recognition of an asset or liability in a transaction (apart from business combinations in which the transaction occurred) that it did not affect either the book or tax profits or losses. Deferred tax is determined with the tax rates that are expected to apply during the fiscal year the asset will be realised or the liability will be settled and is based on the tax rates (and tax laws) that are in force or have been substantially enacted on the balance sheet date. Deferred tax assets are recognized to the extent that a future taxable profit will arise from the use of the temporary difference that creates the deferred tax asset. Deferred income tax is recognised for the temporary differences that arise from investments in subsidiary and affiliated companies, with the exception of the case in which reversals of temporary differences are controlled by the Group and it is possible that the temporary differences will not reverse in the foreseeable future. 2.14 Employee benefits (a) Short-term benefits Short-term benefits to employees in cash or in kind are recorded as an expense when these accrue. (b) Benefits following withdrawal from the Service Benefits following withdrawal from the service include both defined contribution programs and defined benefit programs. The accrued cost of defined contribution programs is recorded as an expense in the period that it concerns. The liability that is recorded in the balance sheet with regard to defined benefit plans is the present value of the commitment to the defined benefit less the fair value of the plan s assets, the changes that arise from non-recognized actuarial gains and losses and the cost of past service. The commitment of the defined benefit is calculated annually by an independent actuary with the projected unit credit method. Actuarial gains and losses that arise from adjustments on the basis of historical data and are above the margin of 10% of the accumulated liability are recorded in the results within the expected average insurance term of the plan s participants. The cost of past service is recorded directly in results, with the exception of the case in which changes to the plan depend on the remaining working years of the employees. In this case, the cost of past service is recorded in the income statement based on the straight-line basis over the vesting period. (c) Employment termination benefits Employment termination benefits are paid when employees decide to retire prior to their normal date of retirement. The Group records these benefits when it is bound, or when it terminates the employment of existing employees based on a detailed schedule for which there is no possibility of withdrawal or when it offers these benefits as an incentive for voluntary retirement. Employment termination benefits that are due in 12 months after the balance sheet date are discounted. In the case of employment termination in which the Group is not able to determine the number of employees who will take advantage of this incentive, these benefits are not accounted for but are recorded as a contingent liability.

ETEM S.A. Group of Companies 22 (d) Profit participation plans and benefits The Group records a liability and a corresponding expense for benefits and profit participation. This amount is calculated from post-tax profits less reserves stipulated by law. 2.15 Grants State grants are recognised at their fair value when it is certain that the grant will be received and that the Group will comply with all stipulated terms. State grants that concern operating expenses are recognized in the results so that these will match the expenses that they will cover. State grants regarding the purchase of tangible fixed assets are recorded in long-term liability accounts as deferred state grants and are transferred as income to the income statement with the straight-line method over the expected useful lives thereof. 2.16 Provisions Provisions are recognized when: i. There is a present legal or constructive commitment as a result of past events. ii. Outflow of funds may be demanded for the commitment s settlement. iii. The amount in question may be reliably estimated. Wherever there are various similar liabilities, the possibility that an outflow shall be required for the settlement thereof is determined by examining the liability category overall. Provisions are calculated at the present value of expenses that, based on the management s best possible estimates, are required to cover the present liability on the balance sheet date (Note 4). The discount rate that is used in determining the present value reflects current market estimations on the time value of money and increases that concern the specific liability. 2.17 Income recognition Income includes the fair value of the sale of goods and provision of services, net of Value Added Tax, discounts and returns. Intra-group revenue is completely eliminated. Revenue is recognised as follows: (a) Sales of goods Sales of goods are recognised when the Group delivers the goods to its customers, when the goods are received by the latter and when collection of the claim is reasonably guaranteed. In the case in which cash refund regarding sales of goods is guaranteed, refunds are accounted for on each balance sheet date as a reduction to income, based on statistical data. (b) Services Income from the provision of services is accounted for in the period in which the services are rendered, based on their stage of completion in relation to all the services that shall be rendered. (c) Income from interest Interest income is recognised on the time proportion basis using the real interest rate method. When receivables are impaired, the book value thereof is reduced to their recoverable amount, which is the present value of the expected future cash flows discounted with the original real interest rate. Subsequently, interest is accounted for based on the same interest rate that is applied on the impaired (new book) value. (d) Dividends Dividends are accounted for as income when a right to collect has been established with the approval of the General Meeting or relative competent body of the affiliated companies. 2.18 Leases (a) A Group company as lessee Leases of fixed assets, in which the Group substantially maintains all the risks and rewards that ownership thereof entails, are classified as finance leases. Financial leases are capitalised at the lease s inception at the lower of the asset s fair value and the present value of the minimum lease payments. The corresponding obligations that arise from the leases, net of finance charges, are recorded as liabilities. The interest element of the finance cost that concerns the finance lease is charged to the income statement over the period of the lease. Fixed assets that were acquired through finance lease are depreciated over the shorter period between the useful lives thereof and the term of their lease. Leases in which the lessor substantially maintains all the risks and rewards that ownership thereof entails are classified as operating leases. Payments that are made with regard to operating leases are recognized in the results proportionately during the term of the lease.

23 Annual Report 2008 (b) A Group company as lessor Fixed items leased under operating leasing are included in the balance sheet s fixed assets. They are amortized during their expected useful life on the basis of similar privately owned fixed assets. The income from rent (net of eventual incentives given to lessees) is estimated under the fixed method during the lease period. 2.19 Dividend distribution The distribution of dividends to the parent company s shareholders is recognized as a liability in the financial statements when the distribution thereof is approved by the General Meeting of the shareholders.

ETEM S.A. Group of Companies 24 3. Financial Instruments The Group hedges the risk that is associated with changes in the prices of metals that are incorporated in manufactured products through the pre-purchase or pre-sale of quantities equal to those of physical acts of metal equivalents (sale or purchase) listed on the London Metal Exchange. In addition, as regards certain floating-rate loans, the Group has entered into interest rate swaps (payment of predetermined rate and collection of Euribor) in order to cover the risk from future changes in loan interest rates beyond the predetermined limits. 3.1 Basic financial risk management instruments and accounting principles followed From 1 January 2005 The results from the settled operations of financial risk management are recorded in income statement when they are realized (difference of interest on interest rate swap contracts and stock market results on aluminium contracts). The Group regularly examines the effectiveness of its cash flow hedging policy on a commercial as well as accounting basis, and records in equity the valuation result of open positions at every balance sheet date, for the part that is deemed effective. 3.2. Determining fair values The fair values of financial assets that are traded in active markets (stock markets) (e.g. derivatives, shares, bonds, mutual funds) are set according to the published prices that are valid on the balance sheet date. The fair value of financial assets is determined by their offer price, while the fair value of financial liabilities is determined by their demand price. The fair values of financial assets that are not traded in active markets are set through the use of valuation techniques and assumptions that are based on market data on the balance sheet date. The nominal value less provisions for doubtful commercial receivables is deemed to approximate their fair value. The fair values of financial liabilities, for the purpose of being recorded in financial statements, are estimated based on the present value of future cash flows that arise from specific contracts using the current interest rate that is available for the Group for the use of similar financial instruments.

25 Annual Report 2008

ETEM S.A. Group of Companies 26 4. Significant accounting estimates and judgments by the management The management s estimates and judgments are re-examined on a continuous basis and are based on historic figures and expectations of future events, which are deemed reasonable pursuant to current circumstances. The Group makes estimates and assumptions regarding the development of future events. Estimates and assumptions that involve significant risk to induce substantial adjustments on the book values of assets and liabilities in the following 12 months concern the recoverable amount of tangible fixed assets, the calculation of income tax, in the measurement of inventories and the calculation of the fair value of derivatives. The Group assess the recoverability of its tangible fixed assets based on the value in use of the Cash Generating Unit where such assets are included. The estimated value in use is based on a five-year-long operational plan prepared by the management and thus it is quite sensitive as the realization or non-realization of the expectations relating to the achievement of sales goals, gross margin percentages, operating results, development ratios and estimated cash flow discounting. Group companies are subject to different income tax regimes. In order for the Group to estimate the tax liability, the aforementioned points must be understood. During the normal business flow numerous transactions and calculations take place in relation to which the calculation of tax is uncertain. In the case where the final taxes arising from tax audits differ from the amounts initially recorded, these differences would affect income tax and the provisions for deferred tax at the period in which the estimation of tax differences took place. The provisions are estimated at the present value of expenses which, based on the best judgment of the management, are necessary to cover the present liability at the balance sheet date. The discount rate used for the present value determination reflects the current market estimates for the time value of money and increases related to the specific liability. It should be noted that due to the fact that figures have been rounded to thousands of Euros, negligible differences may arise between the financial statements and the tables and analyses.

27 Annual Report 2008 5. Segment reporting Primary reporting The internal business structure and the reporting system of the Group is not divided in business segments and monitors its activities in one segment (aluminium processing). Secondary reporting (geographical segments) The headquarters of the Company and its main country of activity is Greece. The sales of the Group are effected mainly in Greece and in other EU countries. Amounts in Euro Sales 31/12/2008 31/12/2007 Greece 50.404.052 54.994.080 European Union 96.415.068 100.061.858 Other European countries 9.540.372 9.457.588 Asia 1.804.301 2.913.259 America 86.512 323.659 Africa 376.475 1.189.725 Oceania 89.752 72.929 Total 158.716.532 169.013.098

ETEM S.A. Group of Companies 28 Amounts in Euro Breakdown of sales per category 31/12/2008 31/12/2007 Sales of merchandise and products 156.260.032 164.482.479 Income from services 2.456.500 3.434.158 Other - 1.096.461 Total 158.716.532 169.013.098 Total assets 31/12/2008 31/12/2007 Greece 177.695.953 193.417.047 Foreign countries 60.932.548 48.787.544 Total 238.628.501 242.204.591 Investments in tangible and intangible assets, and real estate 31/12/2008 31/12/2007 Greece 5.284.764 6.163.593 Foreign countries 16.682.934 6.738.655 Total (notes 6, 7 & 8) 21.967.698 12.902.248

29 Annual Report 2008 6. Tangible fixed assets The tangible assets of the Group and of the parent company as at 31 December 2007 and 2008 and changes thereof during 2007 and 2008 are analyzed as follows: Amounts in Euro Land Buildings Mechanical equipment Transportation equipment Furniture and fixtures Fixed assets under construction Cost or fair value Balance as at 1 January 2007 12.363.837 24.792.061 66.121.701 1.708.636 2.439.913 8.272.589 115.698.737 Foreign exchange differences - -304-1.557 - -2.147-76 -4.084 Additions 42.232 6.216 1.662.097 229.760 172.266 10.660.978 12.773.549 Sales / Deletions -12.751 - -20.065-139.091-1.802 - -173.709 Reclassifications 211.881 3.083.932 6.815.703 209.228 105.046-10.425.790 - Balance at 31 December 2007 12.605.199 27.881.905 74.577.879 2.008.533 2.713.276 8.507.701 128.294.493 Accumulated depreciation Balance as at 1 January 2007 - -4.042.280-15.429.164-885.322-1.650.055 - -22.006.821 Foreign exchange differences - 18 257 8.846 70-9.191 Depreciation of the period -1.251.955-5.261.201-233.874-260.223-7.007.253 (note 24) - - Sales / Deletions - - 20.065 86.726 1.802-108.593 Reclassifications - -215-1.047-1.262 - - Balance at 31 December 2007 - -5.294.432-20.671.090-1.023.624-1.907.144 - -28.896.290 Net book value as of 31 December 2007 Total 12.605.199 22.587.473 53.906.789 984.909 806.132 8.507.701 99.398.203 Mechanical equipment Transportation equipment Furniture and fixtures Fixed assets under construction Amounts in Euro Land Buildings Total Cost or fair value Balance as at 1 January 2008 12.605.199 27.881.905 74.577.879 2.008.533 2.713.276 8.507.701 128.294.493 Foreign exchange differences -7.340-834 -1.710-3.147-4.752-175 -17.958 Additions 2.058.124 23.245 1.087.620 254.960 89.313 17.334.812 20.848.074 Sales / Deletions - -34.083-476.672-286.942-2.725 - -800.722 Reclassifications 117.093 1.095.536 6.322.108 172.129 112.088-7.818.954 - Impairment - - -1.509.898 - - - -1.509.898 Balance at 31 December 2008 14.773.076 28.965.769 79.999.027 2.145.533 2.907.200 18.023.384 146.813.989 Accumulated depreciation Balance as at 1 January 2008 - -5.294.432-20.671.090-1.023.624-1.907.144 - -28.896.290 Foreign exchange differences - 146 706 568 2.511-3.931 Depreciation of the period -1.289.521-5.554.926-215.348-267.736 (note 24) - - -7.327.531 Sales / Deletions - - 446.865 191.819 1.881-640.565 Impairment - - 684.127 - - - 684.127 Balance at 31 December 2008 - -6.583.807-25.094.318-1.046.585-2.170.488 - -34.895.198 Net book value as of 31 December 2008 14.773.076 22.381.962 54.904.709 1.098.948 736.712 18.023.384 111.918.791

ETEM S.A. Group of Companies 30 Transportation equipment included above based on finance lease: Transportation equipment 31/12/2008 31/12/2007 Amounts in Euro Cost capitalized finance leases 13.980 52.079 Accumulated depreciation -11.827-29.191 Net book value 2.153 22.888 COMPANY FIGURES Amounts in Euro Land Buildings Cost or fair value Balance as at 1 January 2007 Mechanical equipment Transportation equipment Furniture and fixtures Fixed assets under construction 11.274.614 18.747.641 52.389.406 1.005.903 1.719.803 2.288.275 87.425.642 Additions 42.233 6.216 1.985.483 137.705 131.483 3.779.234 6.082.353 Sales - - -475.992 - - - -475.992 Destructions - - - - -1.802 - -1.802 Reclassifications - 524.212 3.216.015-70.930-3.811.159 - Balance as at 31 December 2007 Accumulated depreciation Balance as at 1 January 2007 11.316.847 19.278.069 57.114.912 1.143.608 1.920.414 2.256.350 93.030.201 Total - -2.680.687-11.279.803-598.490-1.375.828 - -15.934.808 Depreciation of the period (note 24) - -947.282-4.057.735-120.406-153.189 - -5.278.612 Sales - - 151.287 - - - 151.287 Destructions - - - 1.802-1.802 Balance as at 31 December 2007 - -3.627.969-15.186.251-718.896-1.527.215 - -21.060.331 Net book value as of 31 December 2007 11.316.847 15.650.100 41.928.661 424.712 393.199 2.256.350 71.969.869 Fixed assets under construction Amounts in Euro Land Buildings Mechanical equipment Transportation equipment Furniture and fixtures Total Cost or fair value Balance as at 1 January 2008 11.316.847 19.278.069 57.114.912 1.143.608 1.920.414 2.256.350 93.030.200 Additions 23.091 23.245 1.343.237 111.177 74.145 3.584.223 5.159.118 Sales 0 0-800.845-5.869 0 0-806.714 Destructions 0 0 0 0-1.813 0-1.813 Reclassifications 0 1.314.768 3.502.995 0 102.462-4.920.225 0 Separation of sector -1.351.937-3.540.443-12.347.551-599.119-176.456-47.388-18.062.894 Impairment 0 0-1.509.898 0 0 0-1.509.898 Balance as at 31 December 2008 9.988.001 17.075.639 47.302.850 649.797 1.918.752 872.960 77.807.999 Accumulated depreciation Balance as at -3.627.969-15.186.251-718.896-1.527.215 1 January 2008 - - -21.060.331 Depreciation of the - -969.020-4.300.864-110.710-154.964 period (note 24) - -5.535.558 Sales - 0 438.541 5.869 0-444.410 Destructions 0 0 0 1.813-1.813 Separation of sector 843.401 3.425.946 328.779 141.908 0 4.740.034 Impairment 0 684.127 0 0 0 684.127 Balance as at 31-3.753.588-14.938.501-494.958-1.538.458 December 2008 - - -20.725.505 Net book value as of 31 December 2008 9.988.001 13.322.051 32.364.349 154.839 380.294 872.960 57.082.494

31 Annual Report 2008 7. Intangible assets Intangible assets of the Group and of the parent company only include software that is analyzed as follows: COMPANY FIGURES Amounts in Euro Cost or fair value Balance as at 1 January 2007 2.445.790 2.069.206 Foreign exchange differences -130 - Additions 128.699 81.241 Deletions -275.497 - Balance as at 31 December 2007 2.298.862 2.150.447 Accumulated amortization Balance as at 1 January 2007-1.957.709-1.610.598 Foreign exchange differences 144 - Amortization of the period (notes 24 ) -343.228-328.600 Deletions 275.497 - Balance as at 31 December 2007-2.025.296-1.939.198 Net book value as of 31 December 2007 273.566 211.249 Cost or fair value Balance as at 1 January 2008 2.298.862 2.150.447 Foreign exchange differences -583 - Additions 782.175 125.645 Deletions - - Balance as at 31 December 2008 3.080.454 2.276.092 Accumulated amortization Balance as at 1 January 2008-2.025.296-1.939.198 Foreign exchange differences 117 - Amortization of the period (notes 24) -215.334-142.825 Deletions - - Balance as at 31 December 2008-2.240.513-2.082.023 Net book value as of 31 December 2008 839.941 194.069 8. Investment property Investment property as of 31 December 2008 and 2007 includes buildings and is analyzed as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Cost or fair value Net balance at the beginning of the period 5.214.638 5.448.711 1.893.562 1.995.708 Depreciation of the year (note 24 ) -234.073-234.073-102.146-102.146 Net balance at the end of the period 4.980.565 5.214.638 1.791.416 1.893.562 COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Income from lease fees that have been recognized 1.026.990 1.006.940 108.791 107.607 Direct operating expenses regarding investment property from which lease fees are collected -317.806-356.951 - - Total 709.184 649.989 108.791 107.607

ETEM S.A. Group of Companies 32 9. Investments in entities consolidated using equity method COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Beginning of the period 1.127.319 1.234.686 686.907 686.907 Share in profits/(losses) after taxes (note 28 ) 115.945-60.924 - - Foreign exchange differences -80.458-46.443 - - Impairment - - -74.107 - Balance at the end of the period 1.162.807 1.127.319 612.800 686.907 Associated companies are as follows: HOLDING Company name Country 31/12/2007 31/12/2008 STEELMET ROMANIA Romania 20,00% 20,00% ENERGY SOLUTIONS Bulgaria 38,60% 38,60% VIOHALCO EXPORTS LTD (COPPERPROM LTD) Greece 20,00% 20,00% Κ.Α.Ν.Α.L. S.A. Greece 25,00% 25,00% Summary financial information on affiliated companies: Company name Country Assets Liabilities Income (turnover) Percentage of profits/(loss) after tax 2007 STEELMET ROMANIA Romania 11.909.523 8.008.345 35.136.947 79.344 ENERGY SOLUTIONS Bulgaria 6.489.292 5.796.707 2.342.000-148.385 COPPERPROM LTD Greece 72.195 60.749 84.355 - Κ.Α.Ν.Α.L. S.A. Greece 347.676 43.091 70.799 8.117 18.818.686 13.908.892 37.634.101-60.924 Company name Country Assets Liabilities Income (turnover) Percentage of profits/(loss) after tax 2008 STEELMET ROMANIA Romania 11.941.465 7.689.293 37.167.193 150.657 ENERGY SOLUTIONS Bulgaria 5.049.632 4.464.456 12.378.820-41.460 COPPERPROM LTD Greece 51.715 42.307 49.808 - Κ.Α.Ν.Α.L. S.A. Greece 377.193 45.616 62.115 6.748 17.420.005 12.241.672 49.657.936 115.945

33 Annual Report 2008 10. Investments in entities consolidated using full consolidation method COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 Beginning of the period 23.852.684 19.979.595 Additions 16.709.295 3.873.089 Reversal of impairment 103.309 - Balance at the end of the period 40.665.288 23.852.684 The additions of 2008 concern the following: Α) On 31/12/2008 the separation of the foundry sector and its 100% transfer to ANOXAL S.A. was completed. The separated assets and liabilities of the foundry sector, as included in the company s financial statements prepared in accordance with the IFRS as at the date of separation are analyzed as follows: Category Value in Tangible fixed assets 13.322.861 Inventories 517.641 Cash 3.251 Deferred tax (1.756.634) Grants (105.537) Provision for staff indemnities (91.031) Other liabilities (37.376) Total 11.853.175 The sector was transferred in accordance with the provisions laid down in L. 2166/93, and as a result, out of the assets transferred as above, which amounted to 11.853.175, the amount of 3.327.872 is now the share capital of ANOXAL S.A. Β) ΕΤΕΜ BUILDING SYSTEMS acquired 30% of ANOXAL S.A. for the amount of 1.055. ETEM S.A. now holds 100% of ANOXAL SA. C) The share capital of ANOXAL S.A. was increased by 2.200.080. ETEM s holding in the separated foundry sector, which was transferred to ANOXAL S.A., now amounts to 14.157.620, which also includes 103.309 which pertains to the reversal of the holding impairment that had been created. D) The fund due to AL-AMAR S.A., which amounted to 1.253.240, was paid, and 35% of the share capital was bought out for the amount of 1.251.744. ΕΤΕΜ s holding in AL-AMAR S.A. is now 90%. E) The share capital of the wholly-owned subsidiary ΕΤΕΜ SYSTEMS SRL was increased by 150 thousand. The company s holdings in its subsidiaries, which are all non-listed, are as follows: Company name Country Direct Holding Indirect Holding Direct & Indirect Holding 2007 ETEM Building Systems S.A. Greece 100,00% 0,00% 100,00% ANOXAL S.A. Greece 70,00% 30,00% 100,00% STEELMET S.A. plovdiv AM 115252741 U Bulgaria 89,00% 11,00% 100,00% STEELMET S.A. SOFIA AM 831757874 U Bulgaria 100,00% 0,00% 100,00% ALUBUILD S.R.L Italy 100,00% 0,00% 100,00% MOPPETS LIMITED Cyprus 100,00% 0,00% 100,00% ETEM SCG Serbia 100,00% 0,00% 100,00% PORALU HELLAS LTD Greece 50,00% 0,00% 50,00% ETEM SYSTEMS S.R.L. (ROMANIA) Romania 100,00% 0,00% 100,00% LLC ΕΤΕM SYSTEMS UKR (UKRAINE) Ukraine 100,00% 0,00% 100,00% AL AMAR SA Libya 55,00% 0,00% 55,00% QUANTUM PROFILES SA Bulgaria 0,00% 75,00% 75,00%

ETEM S.A. Group of Companies 34 Company name Country Direct Holding Indirect Holding Direct & Indirect Holding 2008 ETEM Building Systems S.A. Greece 100,00% 0,00% 100,00% ANOXAL S.A. Greece 100,00% 0,00% 100,00% STEELMET S.A. plovdiv AM 115252741 U Bulgaria 89,00% 11,00% 100,00% STEELMET S.A. SOFIA AM 831757874 U Bulgaria 100,00% 0,00% 100,00% ALUBUILD S.R.L Italy 100,00% 0,00% 100,00% MOPPETS LIMITED Cyprus 100,00% 0,00% 100,00% ETEM SCG Serbia 100,00% 0,00% 100,00% PORALU HELLAS LTD Greece 50,00% 0,00% 50,00% ETEM SYSTEMS S.R.L. (ROMANIA) Romania 100,00% 0,00% 100,00% LLC ΕΤΕM SYSTEMS UKR (UKRAINE) Ukraine 100,00% 0,00% 100,00% AL AMAR SA Libya 90,00% 0,00% 90,00% QUANTUM PROFILES SA Bulgaria 0,00% 75,00% 75,00% 11. Financial assets available for sale Financial assets available for sale concern holdings both in domestic and foreign companies with holdings lower than 20%. COMPANY FIGURES Amounts in Euro Balance as at 31 December 2007 370.644 370.644 Additions 89.915 89.915 Balance as at 31 December 2008 460.559 460.559 Valuation loss (158.242) (158.242) Balance as at 31 December 2008 302.317 302.317 Non-current assets (2007) 370.644 370.644 Current assets (2007) - - Total 370.644 370.644 Non-current assets (2008) 302.317 302.317 Current assets (2008) - - Total 302.317 302.317 Financial assets available for sale include the following: 31/12/2008 COMPANY FIGURES 31/12/2008 Amounts in Euro Unlisted shares - Domestic equity instruments 296.550 296.550 - Foreign equity instruments 5.766 5.766 302.316 302.316

35 Annual Report 2008 12. Deferred tax Deferred tax assets and liabilities are offset when there is an applicable legal right to offset current tax assets against current tax liabilities and when deferred income taxes concern the same tax authority. The amounts that are offset are as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Deferred tax assets - - - - Deferred tax liabilities -6.947.087-10.654.667-2.668.611-8.567.454 Total -6.947.087-10.654.667-2.668.611-8.567.454 It is expected that most of the deferred tax liabilities will be liquidated over a period exceeding one year. The total change in deferred income tax is as follows: COMPANY FIGURES Assets Liabilities Total Assets Liabilities Total Balance as at 1/1/2007 1.187.411 (10.638.899) (9.451.488) 779.077 (9.437.394) (8.658.317) Foreign exchange 4.148-4.148 - - - differences of subsidiaries (Debit)/credit recorded in the 143.998 (1.600.519) (1.456.521) 186.238 (344.569) (158.331) income statement (Debit)/credit recorded in shareholders - 249.194 249.194-249.194 249.194 equity Balance as at 31.12.07 1.335.557 (11.990.224) (10.654.667) 965.315 (9.532.769) (8.567.454) Balance as at 1/1/2008 1.335.557 (11.990.224) (10.654.667) 965.315 (9.532.769) (8.567.454) Separation of ANOXAL - - (16.270) 1.772.903 1.756.633 Foreign exchange - - - - - - differences of subsidiaries (Debit)/credit recorded in the 1.941.913 1.762.156 3.704.069 1.874.760 2.245.099 4.119.859 income statement (Debit)/credit recorded in shareholders - 3.511 3.511-22.351 22.351 equity Balance as at 31/12/2008 3.277.470 (10.224.557) (6.947.087) 2.823.805 (5.492.416) (2.668.611) Deferred tax liabilities Fixed asset gains/ Depreciation differences Provision differences Nonrecognisable intangible assets Risk hedging Difference in coefficient Other Total Balance as at 1/1/2007 (9.598.288) - - (279.765) (760.846) - (10.638.899) Foreign exchange differences - - - - - - of subsidiaries (Debit)/credit recorded in the (381.313) - - - (1.219.206) - (1.600.519) income statement (Debit)/credit recorded in - - 249.194 - - 249.194 shareholders equity Balance as at 31/12/2007 (9.979.601) - - (30.571) (1.980.052) - (11.990.224) Balance as at 1/1/2008 (9.979.601) - - (30.571) (1.980.052) - (11.990.224) Separation of ANOXAL - Foreign exchange differences - - - - - - of subsidiaries (Debit)/credit recorded in the 1.747.966 - - 378.197 (364.007) - 1.762.156 income statement (Debit)/credit recorded in shareholders equity - - - 3.511 - - 3.511 Balance as at 31/12/2008 (8.231.635) - - 351.137 (2.344.059) - (10.224.557)

ETEM S.A. Group of Companies 36 Deferred tax assets Fixed asset gains/ Depreciation differences Provision differences Nonrecognisable intangible assets Risk hedging Difference in coefficient Other Total Balance as at 1/1/2007-581.442 128.757 - - 477.212 1.187.411 Foreign exchange differences - 4.148 4.148 of subsidiaries (Debit)/credit recorded in the - 227.382 (51.087) (32.297) 143.998 income statement (Debit)/credit recorded in - - - - shareholders equity Balance as at 31/12/2007-808.824 77.670 - - 449.063 1.335.557 Balance as at 1/1/2008-808.824 77.670 - - 449.063 1.335.557 Separation of ANOXAL - Foreign exchange differences - - of subsidiaries (Debit)/credit recorded in the - 768.424 (46.290) 1.226.314 (6.535) 1.941.913 income statement (Debit)/credit recorded in - - shareholders equity Balance as at 31/12/2008-1.577.248 31.380-1.226.314 442.528 3.277.470 Deferred tax liabilities Fixed asset gains/ Depreciation differences Provision differences Nonrecognisable intangible assets Risk hedging Tax losses Other Total COMPANY FIGURES Balance as at 1/1/2007 (9.157.629) - - (279.765) - - (9.437.394) Foreign exchange differences - - - - - - - of subsidiaries (Debit)/credit recorded in the (318.831) - - - - (25.738) (344.569) income statement (Debit)/credit recorded in - - - 249.194 - - 249.194 shareholders equity Balance as at 31/12/2007 (9.476.460) - - (30.571) - (25.738) (9.532.769) Balance as at 1/1/2008 (9.476.460) - - (30.571) - (25.738) (9.532.769) Separation of ANOXAL 1.772.903 1.772.903 Foreign exchange differences - - - - - - - of subsidiaries (Debit)/credit recorded in the 1.861.755 - - 378.197-5.147 2.245.099 income statement (Debit)/credit recorded in - - - 22.351 - - 22.351 shareholders equity Balance as at 31/12/2008 (5.841.802) - - 369.977 - (20.591) (5.492.416)

37 Annual Report 2008 Deferred tax assets Fixed asset gains/ Depreciation differences Provision differences Nonrecognisable intangible assets Risk hedging Difference in coefficient Other Total COMPANY FIGURES Balance as at 1/1/2007-581.442 128.757 - - 68.878 779.077 Foreign exchange differences - - - of subsidiaries (Debit)/credit recorded in the - 227.382 (51.087) 9.943 186.238 income statement (Debit)/credit recorded in - - - shareholders equity Balance as at 31/12/2007-808.824 77.670 - - 78.821 965.315 Balance as at 1/1/2008-808.824 77.670 - - 78.821 965.315 Separation of ANOXAL (16.270) (16.270) Foreign exchange differences - - - of subsidiaries (Debit)/credit recorded in the - 768.424 (46.290) 1.226.314 (73.688) 1.874.760 income statement (Debit)/credit recorded in - - - shareholders equity Balance as at 31/12/2008-1.560.978 31.380-1.226.314 5.133 2.823.805 13. Inventories COMPANY FIGURES 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Amounts in Euro Merchandise 19.861.443 21.126.680 4.126.987 4.720.981 Finished products 9.181.972 7.827.043 4.223.468 4.114.083 Semi-finished products 9.975.936 12.073.582 9.961.120 12.073.581 By-products and scrap 4.489.268 4.020.269 4.489.268 4.015.595 Work in progress 549.649 1.280.800 43.675 949.620 Raw and auxiliary materials, consumables, spare parts 17.285.002 20.319.351 9.746.378 13.785.859 and packaging materials Prepayments for inventory purchase 2.461.557 1.289.246 1.064.706 11.370 Total 63.804.827 67.936.971 33.655.602 39.671.089 Less: Provisions for impairment -5.508.299-22.574-5.234.072 - Total -5.508.299-22.574-5.234.072 - Total net liquidation value 58.296.528 67.914.397 28.421.530 39.671.089 In addition to the above provision for the impairment of the parent company amounting to 5.234.072 (consolidated 5.508.299), an additional provision was made amounting to 2.059.591 through the costing process, which increased the cost of sales in the current fiscal year. These provisions pertain to all categories of inventories, except for prepayments.

ETEM S.A. Group of Companies 38 14. Trade and other receivables COMPANY FIGURES Current Assets 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Amounts in Euro Customers 32.248.427 31.088.333 13.883.868 15.713.858 Receivables from subsidiaries - - 11.797.681 8.209.184 Receivables from other affiliated entities (note 2.391.599 2.916.252 1.390.916 2.201.800 31) Notes - Cheques receivable 25.378.693 28.250.027 24.906.527 27.858.893 Less: Provisions for impairment -6.626.196-4.232.286-6.031.739-3.793.329 Net trade receivables 53.392.523 58.022.326 45.947.253 50.190.406 Other advance payments 96.118 10.838 96.118 10.838 Current tax assets 234.346 499.851 28.798 229.324 Sundry debtors 2.697.432 2.984.312 1.081.714 1.221.671 Receivables from dividends of affiliated entities - - - - Total other receivables 3.027.896 3.495.001 1.206.630 1.461.833 Total 56.420.419 61.517.327 47.153.883 51.652.239 Non-Current Assets Long-term receivables against affiliated companies - 20.907-20.907 Other long-term receivables 335.224 440.232 235.755 433.063 Total 335.224 461.139 235.755 453.970 Total receivables 56.755.643 61.978.466 47.389.638 52.106.209 Exposure to credit risk: The financial assets entailing credit risk are as follows: GROUP COMPANY 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Available-for-sale financial assets 302.317 370.644 302.317 370.644 Customers (less impairment provisions) 28.013.830 29.772.300 21.040.726 22.331.513 Cash and cash equivalents 3.589.575 4.697.643 701.546 1.457.088 Derivatives 33.883 554.949 33.883 554.949 31.939.605 35.395.536 22.078.472 24.714.194 The time analysis of the customers balances is as follows: ΟΜΙΛΟΣ ΕΤΑΙΡΕΙΑ 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Customers (Amounts in Euro) Serviced amounts 16.749.433 18.265.780 20.133.098 19.747.225 Overdue amounts Up to 6 months 7.165.004 11.171.522 367.764 2.249.289 Over 6 months 4.099.393 334.998 539.864 334.998 Total 28.013.830 29.772.300 21.040.726 22.331.513 The serviced corporate amounts also include receivables from affiliated entities as follows: GROUP COMPANY 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Affiliated Entities (Amounts in Euro) Total of serviced amounts 2.391.599 1.718.903 12.012.845 9.614.829 Overdue amounts Up to 6 months 1.034.671 1.021.181 1.439.188 Over 6 months 2.717.389 48.660 4.031.470 3.279.658

39 Annual Report 2008 The aforementioned amounts do not include receivable and postdated checks (serviced amounts), which are as follows: GROUP COMPANY 31/12/2008 31/12/2007 31/12/2008 31/12/2007 25.378.693 28.250.027 24.906.527 27.858.893 Changes in the provision for customers impairment are as follows: GROUP COMPANY 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Balance at the beginning of the period 4.232.286 3.424.099 3.793.329 2.916.596 Provision for the year 2.393.910 724.911 2.238.410 793.457 Transfer - 83.276-83.276 Balance at the end of the period 6.626.196 4.232.286 6.031.739 3.793.329

ETEM S.A. Group of Companies 40 15. Derivative instruments COMPANY FIGURES Derivatives 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Amounts in Euro Non-current assets Interest rate swaps - 18.638-18.638 Future contracts - 480.098-480.098 Total - 498.736-498.736 Current assets Interest rate swaps 33.883-33.883 - Future contracts - 56.213-56.213 Total 33.883 56.213 33.883 56.213 Long-term liabilities Interest rate swaps - - - - Future contracts 67.481-67.481 - Total 67.481-67.481 - Short-term liabilities Interest rate swaps 994 8.080 994 8.080 Future contracts 1.740.242 497.557 1.445.305 424.584 Total 1.741.236 505.637 1.446.299 432.664 Nominal value of Swaps (in ) 4.550.000 9.900.000 4.550.000 9.900.000 Nominal value of Futures (in ) 6.205.050 9.168.945 5.434.752 7.840.130 The results from the settled financial risk management activities recorded in the income statement in 2008 & 2006 are as follows: 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Value of Swaps Income / 87.325 29.708 87.325 29.708 (Expense) (in ) Value of Futures (in ) -144.958 863.300-44.830 1.055.562

41 Annual Report 2008 16. Cash and cash equivalents The cash in hand and cash equivalents of the Group and of parent company as at 31 December 2007 and 2008 are analyzed as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Cash in hand and in banks 867.693 1.001.486 6.451 12.071 Short-term bank deposits 2.721.882 3.696.157 695.095 1.445.017 Total 3.589.575 4.697.643 701.546 1.457.088 Most of the short-term bank deposits are sight deposits. 17. Share capital Number of shares Ordinary shares Share premium Total Amounts in Euro 1 January 2007 30.009.210 9.302.855 32.349.082 41.651.937 31 December 2007 30.009.210 9.302.855 32.349.082 41.651.937 31 December 2008 30.009.210 9.302.855 32.349.082 41.651.937 COMPANY FIGURES Number of shares Ordinary shares Share premium Total Amounts in Euro 1 January 2007 30.009.210 9.302.855 32.349.082 41.651.937 31 December 2007 30.009.210 9.302.855 32.349.082 41.651.937 31 December 2008 30.009.210 9.302.855 32.349.082 41.651.937

ETEM S.A. Group of Companies 42 18. Reserves OTHER RESERVES Fair value reserves Statutory reserve Special reserves Tax-free reserves Taxed reserves Total other reserves Amounts in Euro Balance as at 1 January 2007 884.833 2.713.250 1.770.396 10.482.023 3.874.126 18.839.795 Carried forward from / to - 769.605 - -900.000 347.077 216.682 Profit recognized directly in equity -866.092 - - - - - Balance as at 31 December 2007 18.741 3.482.855 1.770.396 9.582.023 4.221.204 19.056.477 Balance as at 1 January 2008 18.741 3.482.855 1.770.396 9.582.023 4.221.204 19.056.477 Carried forward from / to 45.000 45.000 Reclassifications 2.623.036-2.623.036 - Loss recognized directly in equity -289.010 - Balance as at 31 December 2008-270.270 3.527.854 4.393.432 9.582.023 1.598.168 19.101.477 COMPANY FIGURES Amounts in Euro Balance as at 1 January 2007 839.297 2.043.478 1.716.801 10.482.023 3.884.304 18.126.606 Transfer from profit carried forward - 131.000 - -900.000 - -769.000 Loss recognized directly in equity -747.583 - - - - - Balance as at 31 December 2007 91.714 2.174.478 1.716.801 9.582.023 3.884.304 17.357.606 Balance as at 1 January 2008 91.714 2.174.478 1.716.801 9.582.023 3.884.304 17.357.606 Transfer from profit carried forward 45.000 45.000 Reclassifications 2.623.036-2.623.036 - Loss recognized directly in equity -67.048 - Balance as at 31 December 2008 24.667 2.219.478 4.339.837 9.582.023 1.261.268 17.402.606 18.1 Fair value reserves The fair value reserves pertain to the valuation, at the end of the year, of the derivatives that the company uses (future contracts and interest rate swaps) for hedging the risk associated with the change in its future cash flows. The valuation of these derivatives on 31/12/2008 resulted in a loss amounting to 1.479.897 (2007: profit amounting to 122.285); a part of such valuation, amounting to 1.512.786, was debited to the income statement of the current fiscal year since the criteria set for documenting its effectiveness as laid down in IAS 39 were not met. The remaining part of the valuation of these derivatives, which was a profit amounting to 32.889 following deduction of the corresponding deferred tax liability 8.222 (2007: tax liability amounting to 30.571), was credited to equity. 18.2 Statutory reserve Pursuant to Greek commercial legislation, companies are obligated to use 5% of the profits they earn during a fiscal year to form a statutory reserve until this equals one third of their paid-up share capital. Throughout their term, companies are not allowed to distribute their statutory reserve.

43 Annual Report 2008 18.3 Special & Tax-free reserves Tax-free reserves and special reserves include: Non-distributed tax-exempt earnings based on special provisions of development laws (on the condition that there are sufficient earnings for their creation). Reserves from tax-exempt income and reserves subject to special taxation pertaining to income from interest for which tax has been deducted at the source. No deferred taxes have been accounted for as regards the above reserves. 19. Borrowing The loan liabilities of the Group on which there are no encumbrances or other fixed charges are analyzed as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Long-term loans Bank loans 5.121.290 7.625.227 800.000 2.482.369 Bond loans 82.500.000 78.750.000 82.500.000 78.750.000 Total long-term loans 87.621.290 86.375.227 83.300.000 81.232.369 Less: Payable within twelve months -25.407.143-18.789.512-24.550.000-17.932.369 Total long-term loans 62.214.147 67.585.714 58.750.000 63.300.000 Short-term loans Short-term loans 32.875.010 22.534.354 4.979.213 492.351 Plus long-term loans payable within twelve months 25.407.144 18.789.512 24.550.000 17.932.369 Total short-term loans 58.282.154 41.323.867 29.529.213 18.424.721 Total loans 120.496.300 108.909.581 88.279.213 81.724.721 The maturities of the long-term loans are as follows: Amounts in Euro Between 1 and 2 years 23.392.719 24.550.000 22.500.000 24.550.000 Between 2 and 5 years 38.821.428 43.035.714 36.250.000 38.750.000 62.214.147 67.585.714 58.750.000 63.300.000 The actual weighted average interest rates on the balance sheet date are as follows: COMPANY FIGURES 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Bank loans (short-term) 4,74% 6,41% 5,79% 5,78% Bank loans (long-term) 4,70% 6,09% 6,72% 6,72% Bond loans 5,37% 4,78% 5,37% 4,78% Liabilities from financial leasing 5,03% 6,65% - - The nominal interest rates are approximately equal to the actual interest rates. The fair values of loans are approximately equal to their book values as loans bear floating interest rates and are, in any event, affected by the lenders margins. The book values of the Group s loans all pertain to loans issued in Euro. The Group has sufficient credit lines to cover future corporate needs. As of 31/12/2008, the balance part of these credit lines amounted approximately to Euro 37 million at a consolidated level, and approximately Euro 31 million at a company level. In fiscal year 2008 the company proceeded to conclude two bond loans amounting to 10.000.000 each, on which interest is calculated based on 6-month Euribor plus the bank margin. The company s bond loans are repaid in four equal installments, and the repayment period is 5 years.

ETEM S.A. Group of Companies 44 19.1 Finance Leasing Amounts in Euro 31/12/2008 31/12/2007 Liabilities from finance leases minimum lease fees The present value of finance lease liabilities is analysed as follows: Up to 1 year 4.150 16.605 From 1 to 5 years - 3.925 Present value of finance lease liabilities 4.150 20.530 The finance lease pertains to transportation equipment of subsidiary STEELMET S.A. plovdiv AM 115252741 U. 20. Provision for staff retirement indemnity Pursuant to Greek labour law, employees are entitled to indemnity in the event of their discharge or retirement, the amount of which varies depending on their salaries and years of service, and the reason of their severance (discharge or retirement). Employees who resign or who are justifiably discharged are not entitled to indemnity. The indemnity due in the event of retirement is equal to 40% of the indemnity that would have been payable in the event of unjustified discharge. In Greece, such plans are not funded. With regard to accumulated benefits, the Group charges their results in each period with a corresponding increase in the retirement liability. Benefits that are paid to pensioners during each period are charged against this liability. The liability for personnel benefits of the Company and of the Group as at 31 December 2007 and 2008 s analyzed as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Liabilities recorded in the balance sheet for: Retirement benefits 1.152.416 1.084.699 998.444 1.032.751 Charges to results Retirement benefits 73.111 136.193 30.771 116.073 Present value of non-funded liabilities 1.239.647 1.218.475 1.176.706 1.166.527 Separation of sector -91.031 - Non-recorded actuarial profits -87.231-133.776-87.231-133.776 1.152.416 1.084.699 998.444 1.032.751 Liability recorded in the Balance Sheet 1.152.416 1.084.699 998.444 1.032.751 Changes to net liability recognized in the Balance Sheet Net liability at the beginning of the year 1.084.699 954.601 1.032.751 916.678 Benefits paid -5.393-6.095 - - Separation of sector -65.078 - Total expenditure recognized in the income statement 73.111 136.193 30.771 116.073 Net liability at the beginning of the year 1.152.416 1.084.699 998.444 1.032.751 Present value of liability at the end of the period 1.152.416 1.084.699 998.444 1.032.751 Analysis of expenditures recognized in the income statement Cost of current employment 99.478 105.248 99.478 105.248 Interest against the liability 51.014 45.779 51.014 45.779 Cost of additional benefits -209.964-194.592-218.954-214.712 Settlement cost from employee transfers 7.398 - - - Expenses 1.008 6.402 1.008 6.402 Separation of sector - - -25.953 - Cost of past service during the period 124.178 173.356 124.178 173.356 Total expenditure recognized in the income statement 73.111 136.193 30.771 116.073 The main actuarial acknowledgements used for accounting purposes are the following: Discount rate 5,5% 4,8% 5,5% 4,8% Future salary increases 4,5% 4,5% 4,5% 4,5%

45 Annual Report 2008 21. Grants Grants pertain mainly to investments in mechanical equipment. COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Balance at the beginning of the year 1.752.716 689.719 505.545 689.719 Separation - - -105.537 - Collection of grants - 1.423.036 - - Depreciation of grants (note 28) -215.606-360.039-139.721-184.173 Balance at the end of the year 1.537.110 1.752.716 260.287 505.545

ETEM S.A. Group of Companies 46 22. Suppliers and other liabilities COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Suppliers 11.776.197 9.039.569 6.004.974 6.108.128 Notes payable 65.919 65.919 65.919 65.919 Advance payments from customers 857.819 953.320 400.313 - Social security funds 613.829 721.911 613.712 657.283 Amounts due to affiliated entities - - 565.419 468.596 Liabilities to other holding companies (note 31) 10.363.196 9.877.501 7.532.444 7.759.399 Dividends payable - - - - Sundry creditors 524.581 517.388 738.277 341.483 Unearned and deferred income 15.638 5.810 - - Accrued expenses 1.054.035 1.586.904 1.017.031 1.252.418 Accruals and deferred income 401.080-8.585 - Total 25.672.294 22.768.322 16.946.674 16.653.226 23. Provisions Changes in provisions are as follows: COMPANY FIGURES Amounts in Euro 1 January 2007 130.148 498.059 Additional provisions of the fiscal year 450.000 677.060 Provisions used during the fiscal year -7.566-352.000 31 December 2007 572.582 823.119 Additional provisions of the fiscal year 1.451.121 947.466 Provisions used during the fiscal year -336.697-373.119 31 December 2008 1.687.006 1.397.466 Out of the additional provisions of the company and of the group for the fiscal year 2008, the amount of 947.466 refers to a liability for indemnifying foreign customers for the sale of defective products, which the parent company is obliged to pay in cash during the following year. The company and consolidated provisions include the amount of 1.397.466 which pertains to liabilities of the ETEM group payable to its customers. The rest of the consolidated provisions pertains to provisions of subsidiary Steelmet Bulgaria. 24. Expenses per category Distribution expenses Administrative expenses Cost of Sales Total 31/12/2007 Amounts in Euro Employee benefits (note 25) 11.414.896 5.027.001 2.000.093 18.441.990 Cost of inventories recognized as an expense 110.860.585 - - 110.860.585 Depreciation (notes 6, 7 & 8) 5.998.333 921.485 664.736 7.584.554 Insurance premiums 258.984 319.779 10.496 589.259 Lease fees 74.400 530.857 167.035 772.292 Transportation expenses 505.690 2.138.470 86.706 2.730.866 Promotion & Advertising expenses 2.023 2.931.030 15.853 2.948.906 Third party fees - benefits 1.844.635 3.371.772 1.233.031 6.449.438 Provisions 120.378 44.798 45.588 210.764 Other expenses 7.831.669 3.902.985 1.204.751 12.939.405 Total 138.911.593 19.188.177 5.428.289 163.528.059

47 Annual Report 2008 Distribution expenses Administrative expenses Cost of Sales Total 31/12/2008 Amounts in Euro Employee benefits (note 25) 11.449.363 5.619.919 2.937.723 20.007.005 Cost of inventories recognized as an expense 115.129.333-6.549 115.135.882 Depreciation (notes 6, 7 & 8) 6.195.722 947.736 633.479 7.776.937 Insurance premiums 211.672 349.744 27.506 588.922 Lease fees 97.901 601.497 299.754 999.152 Transportation expenses 473.460 1.928.573 93.251 2.495.284 Promotion & Advertising expenses 2.014 2.638.326 41.789 2.682.129 Third party fees - benefits 1.289.713 1.616.726 1.558.915 4.465.354 Provisions 28.656 1.207.211-1.235.867 Other expenses 7.648.399 6.216.811 1.359.909 15.225.119 Total 142.526.233 21.126.543 6.958.875 170.611.651 Distribution expenses Administrative expenses COMPANY FIGURES Cost of Sales Total 31/12/2007 Amounts in Euro Employee benefits (note 25) 9.525.647 3.856.060 1.249.460 14.631.167 Cost of inventories recognized as an expense 75.714.183 - - 75.714.183 Depreciation (notes 6, 7 & 8) 4.761.706 622.592 325.060 5.709.358 Insurance premiums 228.947 182.506 896 412.349 Lease fees 70.541 222.360 54.443 347.344 Transportation expenses 495.772 1.461.814 51.574 2.009.159 Promotion & Advertising expenses 2.023 2.369.629 15.853 2.387.505 Third party fees - benefits 1.844.635 1.994.044 1.019.661 4.858.340 Other expenses 6.175.819 1.830.331 380.048 8.386.198 Total 98.819.273 12.539.336 3.096.995 114.455.604 Distribution expenses Administrative expenses Cost of Sales Total 31/12/2008 Amounts in Euro Employee benefits (note 25) 9.115.106 3.878.741 1.837.992 14.831.839 Cost of inventories recognized as an expense 75.944.218 - - 75.944.218 Depreciation (notes 6, 7 & 8) 4.966.527 565.078 248.924 5.780.529 Insurance premiums 173.012 140.245 13.381 326.638 Lease fees 82.977 217.963 53.649 354.589 Transportation expenses 460.081 1.241.668 74.642 1.776.391 Promotion & Advertising expenses 2.014 2.123.770 10.952 2.136.736 Third party fees - benefits 1.289.713 1.417.036 1.517.379 4.224.128 Provisions - 1.207.211-1.207.211 Other expenses 7.026.037 3.170.218 542.330 10.738.585 Total 99.059.685 13.961.930 4.299.249 117.320.864 25. Employee benefits COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Personnel fees and expenses 15.919.107 14.392.150 11.865.871 11.532.424 Social security expenses 3.603.027 3.484.942 2.909.244 2.880.778 Retirement cost of defined benefit plans (note 20) 73.111 136.193 56.724 116.073 Other employee benefits 411.760 428.707-101.891 Total (note 24) 20.007.005 18.441.990 14.831.839 14.631.167

ETEM S.A. Group of Companies 48 26. Net Financial income/(expenses) COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Α. Income Interest income 124.618 269.795 7.644 25.381 Foreign exchange differences 939.904 407.903 539.807 334.794 Other 9.054 5.299 - - Total income 1.073.576 682.997 547.451 360.175 Β. Expenses Interest charges & related expenses -6.838.820-5.271.243-5.210.850-3.834.138 Finance leases -184-1.233 - - Foreign exchange differences -2.047.154-830.167-503.357-611.989 Other - -4.092 - -4.092 Total expenses -8.886.158-6.106.735-5.714.207-4.450.219 Financial cost (net) -7.812.582-5.423.738-5.166.756-4.090.044 27. Income tax The income tax settlement applying the parent company s tax rate is as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Tax of the fiscal year -1.019.842-4.051-615.290-188.843 Deferred tax (note 12) 3.704.069-1.456.521 4.119.859-158.331 Total 2.684.227-1.460.572 3.504.569-347.174 COMPANY FIGURES Income Tax 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Amounts in Euro Accounting profit before taxes/(loss) -18.357.244 2.565.868. -20.767.050 357.343 25% Tax 4.589.311-641.467 5.191.763-89.336 Tax reduction due to: Income exempt from taxation - 308.469-15.255 Increased value due to adjustment 350.435-350.345 - pursuant to L. 2065 Tax rate change 1.489.477-1.489.477 - Difference in the tax rates of foreign subsidiaries 620.185 936.705 - - Tax increase due to: Permanent tax differences -297.606-379.681-256.205-232.248 Supplementary tax on l real estate leases - -5.844 - -5.844 Tax on reserves L.3220/2004 - -35.000 - -35.000 Future tax on distributions by foreign subsidiaries -364.007-1.643.754 - - Tax withheld in Bulgaria, non-exempt -615.291 - -615.291 - Loss without deferred tax -3.088.277 - -2.655.610 - Total income tax of the fiscal year 2.684.227-1.460.572 3.504.569-347.173

49 Annual Report 2008 COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Balance at the beginning of the period 674.766-1.209.658 642.797-597.775 Plus: Income tax of the fiscal year -1.019.842-4.051-615.290-188.843 Less: Receivables for income withheld abroad 200.216 503.586 200.216 503.587 Less: Tax payments for the current fiscal year 893.312 1.384.889 273.249 925.828 Balance at the end of the period 748.452 674.766 500.972 642.797 28. Other income - expenses COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Other income Subsidies of the year 75.885 238.341-118.975 Income from consequential activities 893.779 389.908 639.624 - Interest income - 3.409 - - Depreciation of grants received (note 21) 215.606 360.039 139.721 184.173 Income from services 407.783 946.988 164.743 243.062 Lees fees from buildings - machinery 918.198 1.094.133 226.164 194.800 Other income 680.664 364.618 94.609 73.806 Total income 3.191.915 3.397.436 1.264.861 814.816 Other expenses Impairment of holdings and other financial items -161.234-23.058-129.041-227.060 Impairment of fixed assets -847.857-825.771 Other expenses -1.040.914-918.908 - -59 Total expenses -2.050.005-941.966-954.812-227.119 Profits/(Losses) from the sale of fixed assets - - - - Profits from sale of holdings (Note 9) - 49.000-49.000 Other operating income-expenses (net) 1.141.911 2.504.470 286.486 636.697 Income from dividends 92.601 61.020 240.954 3.859.193 Profits/Losses from affiliated companies Profits from affiliated companies 157.405 87.460 - - Losses from affiliated companies -41.460-148.384 - - Total (note 9) 115.945-60.924 - -

ETEM S.A. Group of Companies 50 29. Commitments CONTRACTUAL COMMITMENTS COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Tangible fixed assets 1.260.799 1.361.254 - - Other - 315.022 - - Total 1.260.799 1.676.276 - - Liabilities from Operating Leases The Group leases vehicles and buildings based on operating leases. The future total payable lease fees according to the operating leases are as follows: CONTRACTUAL COMMITMENTS COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Up to 1 year 429.123 352.088 242.473 292.890 From 1 to 5 years 749.725 876.472 328.241 741.952 More than 5 years - 145.993-145.993 1.178.848 1.374.553 570.714 1.180.835 Increase in results 506.905 401.041 301.282 293.153 30. Contingent Liabilities Receivables The Group s contingent liabilities and receivables pertain to banks, other guarantees and other matters that arise within the framework of its ongoing activities. These liabilities and receivables are as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Liabilities Guarantees for securing liabilities to suppliers 2.796.877 4.195.228 2.796.877 4.195.228 Guarantees for securing good performance 95.625 574.850 - - of contracts with customers Total 2.892.502 4.770.078 2.796.877 4.195.228 COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Receivables Guarantees for securing receivables 405.400 587.714 52.694 52.694 from customers Total 405.400 587.714 52.694 52.694 In 2008 due to problems with the production of Etalbond and Etalbond light product batches, extrajudicial claims were raised by various foreign customers (including an affiliated company) for losses from the use of the company s defective products amounting approximately to a total of 1.496 thousand in accordance with initial estimates. In 2008 the company collected a compensation amounting to 580 thousand from its insurance company against claims raised by its customers, and proceeded to create an indemnification provision amounting to 947 thousand, which is expected be become payable in 2009.

51 Annual Report 2008 31. Affiliated Entities The transactions pertaining to affiliated entities are as follows: COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Sale of goods Subsidiary Companies - 21.222.247 23.589.624 Associated Companies 5.230.917 5.763.069 3.249.968 3.335.386 Other affiliated entities 5.075.301 6.937.767 3.499.165 3.568.399 10.306.218 12.700.836 27.971.380 30.493.409 Sale of services Subsidiary Companies - - - 4.123.043 Associated Companies 8.880 24.397 8.880 24.397 Other affiliated entities 116.489 316.019 89.806 103.316 125.369 340.416 98.686 4.250.756 Purchase of goods Subsidiary Companies - - 6.214.778 8.383.343 Associated Companies 23.291-23.291 - Other affiliated entities 29.812.495 43.371.781 18.474.460 29.147.660 29.835.786 43.371.781 24.712.529 37.531.003 Purchase of services Subsidiary Companies - - 99.197 264.275 Associated Companies - 25.923-25.923 Other affiliated entities 2.278.147 2.398.955 1.950.292 1.973.106 2.278.147 2.424.878 2.049.489 2.263.304 Purchase of fixed assets Subsidiary Companies - - - - Associated Companies - - - - Other affiliated entities 502.739 995.445 502.739 380.197 502.739 995.445 502.739 380.197 Benefits to the Management COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Fees Benefits to the members of the B.o.D and Executives 916.755 891.271 860.919 840.511 Year-end balances that arise from the sale-purchase of goods, services, fixed assets, etc. COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Short-term receivables from affiliated entities: Subsidiary Companies - 11.797.681 8.209.183 Associated Companies 1.186.956 1.623.793 704.984 1.127.231 Other affiliated entities (note 14) 1.204.643 1.292.459 685.932 1.074.569 2.391.599 2.916.252 13.188.597 10.410.983 Liabilities to affiliated companies: Subsidiary Companies - - 565.419 468.596 Associated Companies - 61.522-61.522 Other affiliated entities (note 22) 10.363.196 9.815.980 7.532.444 7.697.876 10.363.196 9.877.502 8.097.863 8.227.994

ETEM S.A. Group of Companies 52 32. Earnings / (Losses) per share The basic earnings / (Losses) per share are calculated by dividing the earning / (loss) that corresponds to the parent company s shareholders by the weighted average number of common shares that are outstanding during the fiscal year. COMPANY FIGURES Amounts in Euro 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Earnings / (Losses) that correspond to the parent company s shareholders -15.653.231 1.169.329-17.262.482 10.170 Weighted average number of shares 30.009.210 30.009.210 30.009.210 30.009.210 Basic earnings / (Losses) per share (Euro per share) -0,5216 0,039-0,5752 0,0003 33. Dividends per share The company shall not distribute a dividend in 2008. 34. Management of financial risk Financial risk factors The Group is exposed to the following risks from the use of its financial instruments: Credit risk Liquidity risk Market risk This note sets forth information on the exposure of the Group to each one of the above risks, the Group s objectives, the policies and procedures applied to risk measurement and management and the Group s capital management. More quantitative particulars on these disclosures are included in the entire range of the consolidated financial statements. The Group s risk management policies are applied so as to identify and analyse the risks encountered by the Group and set limits on risk assumption and apply controls in relation to the latter. Risk management policies and the relevant systems are reviewed periodically so as to incorporate any changes noticed in market conditions and the Group s activities. Supervision of compliance with risk management policies and procedures has been assigned to the Internal Audit Department, which conducts ordinary and extraordinary audits regarding the application of procedures, the findings of which are disclosed to the Board of Directors. Credit risk Credit risk is the risk of the Group s loss in case where a customer or third party in a financial transaction, does not fulfill his contractual obligations and is mainly related to trade receivables and investments in securities. The financial assets entailing credit risk are as follows: GROUP COMPANY 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Available-for-sale financial assets 302.317 370.644 302.317 370.644 Customers 28.013.830 29.772.300 21.040.726 22.331.513 Cash and cash equivalents 3.589.575 4.697.643 701.546 1.457.088 Derivatives 33.883 554.949 33.883 554.949 31.939.605 35.395.536 22.078.472 24.714.194 (a) Trade and other receivables The Group s exposure to credit risk is mainly affected by the characteristics of each customer. The demographic attributes of the Group s customer base, including the risk for default on payments that characterizes the specific market and the country where customers are based, affect credit risk to a lesser extent as there is no geographical concentration of credit risk. On 31/12/2008, two customers exceeded 10% of customers open balance and, therefore, commercial risk is allocated to a large number of customers. The Board of Directors has established a credit policy on the basis of which each new customer is examined on an individual basis in terms of creditworthiness before the standard payment terms are proposed to such customer. The creditworthiness control carried out by the Group includes the examination of bank sources and other third sources of credit rating, if any. Credit limits are set for each customer, which are reviewed in accordance with current circumstances and the terms of sales and collections are readjusted, if necessary. In principal, the credit

53 Annual Report 2008 limits of customers are set on the basis of the insurance limits received for them from insurance companies and, subsequently, receivables are insured according to such limits. When monitoring the credit risk of customers, the latter are grouped according to their credit characteristics, the maturity characteristics of their receivables and any past problems of receivability they have shown. Trade and other receivables include mainly wholesale customers of the Group. Any customers characterised as being of high risk are included in a special list of customers and future sales must be received in advance and approved by the Board of Directors. Depending on the background of the customer and its capacity, the Group demands real or other security (e.g. letters of guarantee) in order to secure its receivables, if possible. The Group records a provision of impairment representing its estimate about losses related to trade and other receivables and investments in securities. This provision mainly consists of impairment losses of specific receivables that are estimated based on given circumstances that they will be materialized though they have not been finalized yet. (b) Investments The investments of the Group are classified pursuant to the purpose for which they were acquired. The Management decides on the appropriate classification of the investment during the time such was acquired and reviews the classification on each presentation date. (c) Guarantees The Group s policy consists in not providing any financial guarantees, unless the Board of Directors decides so on an exceptional basis, this concerning subsidiary or affiliated companies. Liquidity risk Liquidity risk consists in the Group not being in position to meet its financial liabilities when these expire. The approach adopted by the Group to manage liquidity is to ensure, by holding absolutely necessary cash and adequate credit limits from cooperating banks, that it will always have adequate liquidity to cover its obligations when they mature, under normal or more difficult conditions, without there being unacceptable losses or its reputation being jeopardised. In order to avoid liquidity risks, the Group sets up a provision for cash flows for a year when preparing the annual budget and a monthly rolling provision of three months so as to ensure sufficient cash in hand to meet its operating needs, including coverage of its financial obligations. This policy does not take into account the relevant effect from extreme conditions that cannot be foreseen. Following is an analysis of financial liabilities and derivatives (for which purchases are shown with a negative sign and sales with a positive sign), excluding interest, in accordance with the respective contractual maturity. GROUP Value 31/12/2007 <1 year 1-2 years 2-5 years >5 years Total 31 December 2007 Financial liabilities Bank loans 30.159.581 25.073.867 800.000 4.285.714-30.159.581 Bond loans 78.750.000 16.250.000 23.750.000 38.750.000-78.750.000 Finance lease liabilities 20.531 16.606 3.925 - - 20.531 Suppliers and other liabilities 22.768.322 22.768.322 - - - 22.768.322 131.698.434 64.108.795 24.553.925 43.035.714-131.698.434 Derivatives (analysis per category) Value 31//12/2007 <1 year 1-2 years 2-5 years >5 years Total Nominal value of interest rate swaps 9.900.000 9.100.000 800.000 - - 9.900.000 Nominal value of Aluminium Derivatives 9.168.945 7.534.870 602.600 1.031.475-9.168.945 19.068.945 16.634.870 1.402.600 1.031.475-19.068.945 COMPANY Value 31/12/2007 <1 year 1-2 years 2-5 years >5 years Total 31 December 2007 Financial liabilities Bank loans 2.974.721 2.174.721 800.000 - - 2.974.721 Bond loans 78.750.000 16.250.000 23.750.000 38.750.000-78.750.000 Suppliers and other liabilities 16.653.226 16.653.226 - - - 16.653.226 98.377.947 35.077.947 24.550.000 38.750.000-98.377.947

ETEM S.A. Group of Companies 54 Derivatives (analysis per category) Value 31//12/2007 <1 year 1-2 years 2-5 years >5 years Total Nominal value of interest rate swaps 9.900.000 9.100.000 800.000 - - 9.900.000 Nominal value of Aluminium 7.840.130 6.206.055 602.600 1.031.475-7.840.130 Derivatives 17.740.130 15.306.055 1.402.600 1.031.475-17.740.130 GROUP Value 31/12/2007 <1 year 1-2 years 2-5 years >5 years Total 31 December 2008 Financial liabilities Bank loans 37.996.300 34.532.152 892.719 2.571.429-37.996.300 Bond loans 82.500.000 23.750.000 22.500.000 36.250.000-82.500.000 Finance lease liabilities 4.150 4.150 - - - 4.150 Suppliers and other liabilities 25.672.295 25.672.295 - - - 25.672.295 146.172.745 83.958.597 23.392.719 38.821.429-146.172.745 Derivatives (analysis per category) Value 31//12/2007 <1 year 1-2 years 2-5 years >5 years Total Nominal value of interest rate swaps 4.550.000 4.550.000 - - - 4.550.000 Nominal value of Aluminium 6.205.050 5.173.575 601.275 430.200-6.205.050 Derivatives 10.755.050 9.723.575 601.275 430.200-10.755.050 COMPANY Value 31/12/2007 <1 year 1-2 years 2-5 years >5 years Total 31 December 2008 Financial liabilities Bank loans 5.779.213 5.779.213 - - - 5.779.213 Bond loans 82.500.000 23.750.000 22.500.000 36.250.000-82.500.000 Suppliers and other liabilities 16.946.674 16.946.674 - - - 16.946.674 105.225.887 46.475.887 22.500.000 36.250.000-105.225.887 Derivatives (analysis per category) Value 31//12/2007 <1 year 1-2 years 2-5 years >5 years Total Nominal value of interest rate swaps 4.550.000 4.550.000 - - - 4.550.000 Nominal value of Aluminium Derivatives 5.434.752 4.403.277 601.275 430.200-5.434.752 9.984.752 8.953.277 601.275 430.200 9.984.752 Market risk The market risk consists in the changes in prices of raw materials, 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 these risks in the context of acceptable parameters while optimizing returns. The Group enters into transactions with derivative financial instruments so as to hedge a part of the risks arising from market conditions. (a) Fluctuation risk of metal prices (copper, aluminium, other metals) The Group bases both its purchases and sales on stock market prices/ ratios for 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 on London Metal Exchange-LME). The Group, however, does not use hedging instruments for the entire stock of its operation and, as a result, any drop in metal prices may have a negative effect on its results through inventories depreciation.

55 Annual Report 2008 (b) Foreign exchange risk The Group is exposed to foreign exchange risk in relation to the sales and purchases carried out and the loans issued in a currency other than the functional currency of the Group s companies, which is mainly Euro. The currencies in which these transactions are held are mainly Euro, USD, GBP and the Romanian currency. Loan interest is denominated in the same currency with 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 exchange positions are considered to be long-term. The risk from variation in exchange rates is as follows: GROUP 31 December 2007 EUR USD GBP LEV DINAR RON OTHERS Trade and other receivables 46.277.807 1.196.453 125.946 10.607.898-951.691 2.357.531 Borrowing -108.228.876 - - - - -701.235 - Trade and other creditors -12.088.437-223.869-14.288-3.003.014 - -1.601.482-5.837.233 Cash 2.688.691 - - 310.684-115.861 1.582.407-71.350.815 972.584 111.658 7.915.566 - -1.235.165-1.897.295 Derivatives for risk hedging (Nominal Value) - - - - - - - Total risk -71.350.815 972.584 111.658 7.915.566 - -1.235.165-1.897.295 COMPANY 31 December 2007 EUR USD GBP LEV DINAR RON OTHERS Trade and other receivables 50.329.840 1.196.453 125.946 - - - - Borrowing -81.724.721 - - - - - - Trade and other -16.413.960-223.869-14.288 - - - -1.108 creditors Cash 1.457.088 - - - - - - -46.351.753 972.584 111.658 - - - -1.108 Derivatives for risk hedging (Nominal Value) - - - - - - - Total risk -46.351.753 972.584 111.658 - - - -1.108 GROUP 31 December 2008 EUR USD GBP LEV DINAR RON OTHERS Trade and other receivables 40.179.029 1.010.267 147.697 12.374.352 2.709.075 - - Borrowing -119.507.570-481.475 - - - -507.256 - Trade and other -20.145.692-9.477-38.046-3.912.542-67.309-1.499.185-44 creditors Cash 3.116.472 74.246-349.250 49.606 - - -96.357.761 593.561 109.651 8.811.060 2.691.372-2.006.441-44 Derivatives for risk hedging (Nominal Value) - - - - - - - Total risk -96.357.761 593.561 109.651 8.811.060 2.691.372-2.006.441-44

ETEM S.A. Group of Companies 56 COMPANY 31 December 2008 EUR USD GBP LEV DINAR RON OTHERS Trade and other 45.995.919 1.010.267 147.697 - - - - receivables Borrowing -87.797.738-481.475 - - - - - Trade and other -16.899.107-9.477-38.046 - - - -44 creditors Cash 631.951 69.595 - - - - - -58.068.975 588.910 109.651 - - - -44 Derivatives for risk hedging (Nominal Value) - - - - - - - Total risk -58.068.975 588.910 109.651 - - - -44 Sensitivity analysis: If the foreign currency was increased by 10% in relation to Euro, the effect would be: GROUP Results Shareholders equity 2008 2007 2008 2007 USD 65.951 108.065 - - GBP 12.183 12.406 - - Lev 979.007 879.507 - - RON -222.938-137.241 - - Dinar 299.041 - - - COMPANY Results Shareholders equity 2008 2007 2008 2007 USD 65.434 108.065 - - GBP 12.183 12.406 - - Lev - - - - RON - - - - Dinar - - - - If the foreign currency was depreciated by 10% in relation to Euro, the effect would be: GROUP Results Shareholders equity 2008 2007 2008 2007 USD -53.960-88.417 - - GBP -9.968-10.151 - - Lev -801.006-719.597 - - RON 182.404 112.288 - - Dinar -244.670 - - - COMPANY Results Shareholders equity 2008 2007 2008 2007 USD -53.537-88.417 - - GBP -9.968-10.151 - - Lev - - - - RON - - - - Dinar - - - -

57 Annual Report 2008 (c) Interest rate risk The Group finances its investments and its needs for working capital through bank loans and bonded loans, with the result of burdening its results with interest charges. Any upward trend of interest rates will have a negative effect on results since the Group will bear additional borrowing costs. Interest rate risk is mitigated since part of the Group borrowing is converted into fixed rates using financial instruments (interest rate swaps). The relevant analysis is as follows: GROUP COMPANY 31/12/2008 31/12/2007 31/12/2008 31/12/2007 Fixed rate Financial liabilities 4.550.000 9.900.000 4.550.000 9.900.000 4.550.000 9.900.000 4.550.000 9.900.000 Variable rate Financial liabilities 120.500.450 108.930.111 88.279.213 81.724.721 120.500.450 108.930.111 88.279.213 81.724.721 If interest rates were increased/ decreased by 25 basis points, the effect on results and shareholders equity would be: GROUP Results Shareholders equity 2008 2007 2008 2007 Variable rate -/+313.296 -/+ 221.384 - - Interest rate swaps - - -/+34.973 -/+34.268 COMPANY Results Shareholders equity 2008 2007 2008 2007 Variable rate -/+229.069 -/+169.574 - - Interest rate swaps - - -/+34.973 -/+34.268 Capital management The Board of Director s policy consists in maintaining a strong capital structure so as to keep 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 net results divided by total equity, save non-convertible preferential shares and minority interests. The Board of Directors also monitors the level of dividends distributed to holders of common 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 own shares purchase. There were no changes in the approach adopted by the Group in relation to capital management during the present period.

ETEM S.A. Group of Companies 58 35. Tax Unaudited fiscal years The Group s companies have not been audited by the competent tax authorities for the fiscal years noted in the table below. As a result, their tax liabilities for these unaudited years have not been finalized. The company and the group have made a provision for the unaudited fiscal years amounting to a total of 160 thousand. Company name Country Holding Method of consolidation Unaudited years ΕΤΕΜ S.A. GREECE PARENT 2005-2008 ΕΤΕΜ BUILDING SYSTEMS S.A. GREECE 100,00% EQUITY 2004-2008 ANOXAL S.A. GREECE 100,00% FULL CONSOLIDATION 2004-2008 PORALU HELLAS LTD GREECE 50,00% EQUITY 2000-2008 K.A.N.A.L. S.A. GREECE 25,00% EQUITY 2005-2008 EK.AN.AL. S.A. GREECE 14,81% EQUITY 1999-2008 COPERPROM S.A. GREECE 20,00% EQUITY 2003-2008 STEELMET SA A.M 831757874U BULGARIA 100,00% FULL CONSOLIDATION 2007-2008 STEELMET SA A.M 115252741U BULGARIA 100,00% FULL CONSOLIDATION 2008-2008 STEELMET ROMANIA SA ROMANIA 20,00% EQUITY 2002-2008 ALUBUILD SRL ITALY 100,00% FULL CONSOLIDATION 2003-2008 MOPPETS LTD CYPRUS 100,00% FULL CONSOLIDATION 2003-2008 ETEM S.C.G D.O.O SERBIA 100,00% FULL CONSOLIDATION 2004-2008 ENERGY SOLUTIONS SA BULGARIA 38,60% EQUITY 2005-2008 ETEM SYSTEMS SRL ROMANIA 100,00% FULL CONSOLIDATION 2005-2008 LLC ETEM SYSTEMS UKR UKRAINE 100,00% FULL CONSOLIDATION 2005-2008 QUANTUM BULGARIA 75,00% FULL CONSOLIDATION 2007-2008 AL-AMAR LIBYA 90,00% FULL CONSOLIDATION 2006-2008 36. Number of employees Number of persons employed at the end of the current year: Group 901, Company 425 (2007: Group 939, Company 486) 37. Events after the balance sheet date On 26 February 2009, the Board of Directors of ΕΤΕΜ S.A. decided to separate the ETALBOND sector and transfer it not to ANOXAL S.A. as already announced on 31/01/2008, but to its wholly-owned subsidiary ETALBOND S.A. COMPOSITE ALUMINIUM PANELS, with distinctive title ETALBOND S.A. The transfer and acquisition of the above sector shall occur according to the provisions of articles 1-5 of L. 2166/93, while the 28/02/2009 has been set as the date of the transformation balance sheet. The branch is active in the production of composite panels and is mainly oriented to the construction sector and the sector of signpost production. In 2008, the sales of ETALBOND products represented approximately 24 % of the ETEM S.A. turnover. The consolidated results of ETEM SA will not be affected by the spin-off of the branch. The separation shall take place for internal reorganization purposes and is aimed at ensuring better service to customers.

59 Annual Report 2008

ETEM S.A. Group of Companies 60 INDEPENDENT CERTIFIED AUDITOR-ACCOUNTANT S REPORT To the Shareholders of ETEM S.A. Audit report on the Financial Statements. We audited the attached company and consolidated financial statements of ETEM S.A. (the Company), which consist of the company and consolidated balance sheet as at 31 December 2008, income statements, statements of changes in shareholders 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. Management s responsibility for the Financial Statements The responsibility for the compilation of the financial statements lies with the management of the company in accordance with the International Financial Reporting Standards as these are adopted by the European Union. This responsibility includes planning, application and maintenance of an internal audit system regarding the compilation and fair presentation of the financial statements that are free from substantial inaccuracies that may result from error or fraud. The responsibility also includes the choice and application of appropriate accounting policies and accounting estimations that are logical for the situation. Auditor s Responsibility Our responsibility is limited to forming and expressing an opinion on the financial statements, based on the audit conducted. Our audit was performed according to the Greek Auditing Standards, which are in line with the International 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 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 financial statements. The procedures are selected according to the auditor s judgment and include the estimation of risk of substantial inaccuracies of the financial statements due to fraud or error. To estimate this risk, the auditor takes into account the internal audit system regarding the compilation and fair presentation of the financial statements that aim to the design of audit procedures for the situation and not an opinion on the effectiveness of the company s internal audit system. The audit also includes the evaluation of the followed accounting principles, the fairness of the Management s estimations and, generally, an evaluation of the overall presentation of the financial statements. We believe that the audit conducted provides sufficient basis for substantiating our opinion. Opinion In our opinion, the attached company and consolidated financial statements present in a true and fair manner the financial position of the Company and the Group on 31 December 2008, 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 issues We have checked the agreement and correspondence of the Report prepared by the Board of Directors against the attached financial statements, within the framework of the stipulations laid down in articles 43a, 107 and 37 of Codified Law No. 2190/1920. Athens, 27 March 2009 THE CERTIFIED AUDITOR ACCOUNTANT GEORGE ANASTOPOULOS REG.NO. SOEL 15451

61 Annual Report 2008 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 2008 Dear Shareholders, 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 2008. This report includes a summary of the financial results and changes that happened during the year, reference to important events that took place, an analysis of prospects and risks, as well as a quotation 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 ANOXAL S.A. based in Athens; STEELMET S.A. Plovdiv AM 115252741 U based in Philippopolis (Plovdiv), Bulgaria; STEELMET S.A. Sofia AM 831757874 U based in Sofia, Bulgaria; ALUBUILD S.R.L. based in Reggio Emillia, Italy; MOPPETS LTD. based in Nikosia, 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 EAMAR S.A. based in Tripoli, Libya. The relation that made the consolidation necessary was a parent-subsidiary one. Subsidiary ΕΤΕΜ BUILDING SYSTEMS S.A., which is based in Athens, was consolidated using the equity method rather than the full conciliation method due to the fact that its relevant figures were deemed negligible. 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, 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. I. SUMMARY REPORT ON THE FISCAL YEAR 2008. Results of the fiscal year In 2008 ETEM and its subsidiaries saw a drop in their financial results and proceeded to redefine their priorities in accordance with new facts. The unprecedented crisis of the financial system affected the so-called actual economy too. Thus, the financial results of both the company and the Group, mainly due to what happened in the last quarter of 2008, are reduced compared to the corresponding period of 2007. The drop in sales is mainly due to a reduction in economic development in Greece, the Balkans and the EU countries. In addition, the financial crisis forced us to look for a for possible devaluation of our assets (in accordance with the IFRS) and we recognized losses caused by the devaluation of inventories which was mainly due to a drop in the prices of raw materials (-35% of the market price of aluminium in accordance with the LME), fixed assets and doubtful trade receivables amounting approximately to 10.8 million. Since August 2008, we have taken all measures necessary for reducing our working capital, thus resulting in a gradual reduction in bank loans, as well as for reducing operating expenses both in Greece and our foreign subsidiaries. Some of those measures were painful, but necessary. At the same time, we intensified our effort to ensure better services and facilities to our customers and partners in the market. As part of our corporate reorganization process, the foundry sector of ETEM S.A. was separated and transferred to ANOXAL S.A., a whollyowned subsidiary of ETEM S.A. The foundry branch has already started working together with our parent company ELVAL S.A. in metal recycling. The foundry branch items that were transferred were as follows: Category Value in Tangible fixed assets 13.322.861 Inventories 517.641 Cash 3.251 Deferred tax (1.756.634) Grants (105.537) Provision for staff indemnities (91.031) Other liabilities (37.376) Total 11.853.175 Furthermore, after 31 December 2008, a decision was made, which is under implementation, to separate the ETALBOND branch. Both separations were aimed at ensuring greater flexibility, better management of working capital, further optimization of product quality and better cooperation with the wider Group to which we belong.

ETEM S.A. Group of Companies 62 In the following tables there is a summary of the consolidated and company results of ETEM S.A.: 31/12/2008 31/12/2007 Change % Sales 158.716.532 169.013.098-6,09% Net earnings before tax, interest, depreciation -2.976.271 15.574.063-118,08% and amortization % on Sales -1,77% 9,21% Net earnings before tax, depreciation and amortization -10.580.307 10.150.421-204,24% % on Sales -6,67% 6,01% Net profits / (losses) before taxes -18.357.244 2.565.867-815,44% % on Sales -11,57% 1,52% Net Profits / (losses) after taxes -15.673.017 1.105.295-1517,99% % on Sales -9,87% 0,65% COMPANY FIGURES 31/12/2008 31/12/2007 Change % Sales 101.193.130 114.407.101-11,55% Net earnings before tax, interest, depreciation -10.060.720 6.297.552-259,76% and amortization % on Sales -9,94% 5,50% Net earnings before tax, depreciation and amortization -14.986.522 6.066.701-347,03% % on Sales -14,81% 5,30% Net earnings before tax -20.767.050 357.343-5911,52% % on Sales -20,52% 0,31% Net profits / (losses) after taxes -17.262.482 10.170-169845,43% % on Sales -17,06% 0,01% Balance Sheet The Group s assets as at 31 December 2008 amounted to 238,6 million, reduced by 3,6 million compared to 2007 which was mainly due to a reduction in current assets by 15.8 million. The reduction in current assets resulted from the emphasis placed by the ETEM Management, both in Greece and abroad, on reducing working capital, mainly from August 2008 onward, as well as from a devaluation of inventories caused by a significant drop in aluminium prices. The Group s total liabilities rose by 13,0 million, reaching 159,9 million compared to 147,0 million in 2007. Finally, there is a reduction in Shareholders Equity by 16,5 million, which amounted to 78,7 million compared to 95,2 million in 2007. Cash flows Cash flows from operating activities are positive both at a consolidated and a company level. The consolidated operating cash flows amounted to 9,4 million, and the respective company cash flows amounted to 3,1 million. It should be noted that in the first half of 2008 the operating cash flows both at a company and a consolidated level were negative, amounting to -7,2 million and -3,6 million respectively. Finally, the cash flows from investment activities amounted to -21,4 million for the Group and -9,7 million for the company. Investments In 2008, the Group realized investments of a total value of 21,7 million, out of which 10,3 million pertained to parent company investments, whereas the investments realized by subsidiary Steelmet S.A. in Bulgaria amounted to 11,4 million. Such investments pertained mainly to the construction of new storage facilities, a plastic profile manufacturing plant and an office building in Sofia Bulgaria, as well as the installation of a delaquering line in the factory at Agios Thomas, Viotia.

63 Annual Report 2008 Following is table of the main financial ratios of the Group and the company. Group Company 12Μ 2008 12Μ 2007 12Μ 2008 12Μ 2007 Gross profit margin 10,20% 17,81% 2,11% 13,62% (Gross profit/sales) Net profit margin -9,87% 0,65% -17,06% 0,01% (Net profit/sales) Debt/equity ratio 2,03 1,54 1,72 1,32 (loans/shareholders equity) Liquidity ratio 1,35 2,05 1,55 2,58 (Current assets / short-term liabilities) Return on Equity -19,92% 1,16% -26,44% 0,01% (Net income / shareholders equity) Inventory turnover ratio 149 178 105 147 (Inventories / cost of sales) x 365 days Receivable turnover ratio 130 133 170 165 (Receivables / sales) x 365 days Payable turnover ratio 66 60 62 62 (Short-term liabilities / cost of sales) x 365 days

ETEM S.A. Group of Companies 64 II. IMPORTANT EVENTS FROM 1/1/2008 TO 31/12/2008 Following are important events that took place in the first half of 2008: i. Investments in ETEM subsidiaries In 2008 the share capital of the wholly-owned subsidiary ETEM Systems S.R.L.. which is based in Bucharest, Bulgaria, was increased by 150.000 due to its increased needs for working capital, for the payment of the amount due to AL-AMAR S.A. which is based in Tripoli, Libya, which amounted to 1.253.240, as well as for the acquisition of an additional 35% of its share capital for the amount of 1.251.744. Finally, the company proceeded to increase the share capital of subsidiary ANOXAL S.A. by 2.200.080. ii. Changes in the management and administration of the Group In accordance with a resolution passed by the company s Board of Directors on 02/06/2008, the following replacements and new appointments were decided in connection with the structure of parent company ETEM: Replacement of the Head of Corporate Announcements Mr. Evangelos Karavasilis with Mr. Emmanuel Kartsomichelakis and of the Head of Shareholders Service Mr. Ioannis Papadimitriou with Mr. Vardis Kounalakis; discharge of the Head of Internal Audit Mr. Athanasios Tsiris, son of Dimitrios, and replacement thereof with employee Mr. Spyros Mousouris, son of Ioannis; and appointment (a) of Mr. Athanasios Tsiris as Financial Manager of Domestic Activities and (b) Mr. Panagis Stratiotis as CFO of the ETEM Group. In accordance with a new resolution passed by the Board of Directors on 26/11/2008, the Board of Directors was reorganized as a body as follows: 1. Markos Kallergis, Chairman, non-executive member 2. Dimitrios Pavlakis, Vice chairman, executive member 3. Antonios Kallergis, executive member 4. Andreas Kyriazis, independent non-executive member 5. Charalambos Papanikolaou, executive member 6. Ioannis Oikonomou, executive member 7. Efstathios Striber, independent non-executive member Following that, the Board of Directors appointed Vice Chairman Mr. Dimitrios Pavlakis as Company General Manager and Director Mr. Antonios Kallergis as Deputy General Manager.

65 Annual Report 2008 iii. Annual Ordinary General Assembly of Shareholders On 11 June 2008, the Annual Ordinary General Assembly of the Shareholders of ETEM took place. The assembly was attended by persons representing 78,42% of the company s shares, and they passed the following resolutions unanimously: To approve the financial statements of fiscal year 2007 and the reports prepared by the Board of Directors and Auditors thereon. To relieve the members of the Board of Directors and the Auditors of all liability with regard to the financial administration for fiscal year 2007. To approve how and when to appropriate the earnings of fiscal year 2007. To appoint the auditing firm ERNST & YOUNG CERTIFIED AUDITORS ACCOUNTANTS S.A. as certified auditor for fiscal year 2008, in accordance with their offer. 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. The elect the following members of the Board of Directors for a three (3) year long term: 1. DIMITRIOS PAVLAKIS 2. MARKOS KALLERGIS 3. ANTONIOS KALLERGIS 4. IOANNIS OIKONOMOU 5. CHARALAMBOS PAPANIKOLAOU 6. ANDREAS KYRIAZIS, independent non-executive member 7. EFSTATHIOS STRIBER, independent non-executive member To approve the conclusion of ordinary bond loans in accordance with L. 3156/2003, up to the amount of Euro twenty million ( 20.000.000,00). To approve the commitment of taxed inventories for own participation in investments subjected to the grant regime of Law No. 3299/04. A detailed account of the resolutions passed by the Annual Ordinary General Assembly is posted on the ΕΤΕΜ Website (http://www.etem.gr) and on the Website of the Athens Stock Exchange (http://www.ase.gr). iv. Extrajudicial claims raised by Etalbond and Etalbond Light customers During the previous fiscal year, due to problems with the production of Etalbond and Etalbond light product batches, extrajudicial claims were raised by various foreign customers (including an affiliated company) for losses from the use of the company s defective products amounting approximately to a total of 1.496 thousand in accordance with initial estimates. In 2008 the company collected a compensation amounting to 580 thousand from its insurance company against claims raised by its customers, and proceeded to create an indemnification provision amounting to 947 thousand, which is expected be become payable in 2009.

ETEM S.A. Group of Companies 66

67 Annual Report 2008 III. PROSPECTS AND MAJOR RISKS & UNCERTAINTIES FOR FISCAL YEAR 2008 Prospects While 2009 is expected to be more difficult than 2008, our actions are aimed at reinforcing the Company and the Group. We feel that there is going to be considerable rationalization in the market and in our sector, and our goal is to improve so as to become stronger when the financial crisis and the recession are over. The company, through its efforts to deal with current adverse circumstances, has taken actions to reduce cost and inventories and thus become less dependent on debt, as well as efforts to enter new markets. In addition, the Company has prepared a business plan which resulted from the team efforts made by our executives in the following areas: Domestic Commercial Area, International Commercial Area, Factory and Production Management, Financial Services. The business plan has been submitted to and approved by the Company s Board of Directors, and its main acknowledgements are: The year 2009 will be an extremely difficult year. ETEM keeps reducing its expenditures, keeping its working capital under control and developing new products. In addition, it focuses on choosing a product mix of a higher added value and larger profit margin, thus trying to increase its gross profit. At the same time, it takes actions to reinforce its position in the market and its partners both in the domestic and foreign markets. Thus, despite our estimate that the markets will still face difficulties in 2010, we believe that we will start seeing the results of our efforts in that year. It should be noted that business plans always have inherent uncertainty, especially under the current unstable circumstances; however, we feel that such uncertainty and instability will prove to be beneficial to us, taking into account all the measures we have taken as above. Furthermore, our investment in Libya is progressing and we are now taking a positive look on possibilities for a strategic partnership, in accordance with our initial goals. Main risks 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. Credit risk Credit risk is the risk of loss in the event that a customer or third party to a financial transaction fails to fulfill 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 their trade receivables with insurance companies to the maximum possible degree, and domestic 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 the 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 fulfill 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 fulfill 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 fulfillment of its financial liabilities. This policy does not take into account the relevant effect of unforeseeable extreme conditions. 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 on 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.

ETEM S.A. Group of Companies 68 (a) Metal price fluctuation risk (copper, aluminium, other metals) 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. If the foreign currency was increased by 10% in relation to Euro, the effect would be: GROUP Results Shareholders equity 2008 2007 2008 2007 USD 65.951 108.065 - - GBP 12.183 12.406 - - Lev 979.007 879.507 - - RON -222.938-137.241 - - Dinar 299.041 - - - COMPANY Results Shareholders equity 2008 2007 2008 2007 USD 65.434 108.065 - - GBP 12.183 12.406 - - Lev - - - - RON - - - - Dinar - - - - If the foreign currency was depreciated by 10% in relation to Euro, the effect would be: GROUP Results Shareholders equity 2008 2007 2008 2007 USD -53.960-88.417 - - GBP -9.968-10.151 - - Lev -801.006-719.597 - - RON 182.404 112.288 - - Dinar -244.670 - - - COMPANY Results Shareholders equity 2008 2007 2008 2007 USD -53.537-88.417 - - GBP -9.968-10.151 - - 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 part of the Group s borrowing is set at fixed rates either directly or using financial instruments (interest rate swaps).

69 Annual Report 2008 If interest rates were increased/decreased by 25 basis points, the effect on results and shareholders equity would be: GROUP Results Shareholders equity 2008 2007 2008 2007 Variable rate -/+313.296 -/+ 221.384 - - Interest rate swaps - - -/+34.973 -/+34.268 COMPANY Results Shareholders equity 2008 2007 2008 2007 Variable rate -/+229.069 -/+169.574 - - Interest rate swaps - - -/+34.973 -/+34.268 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.

ETEM S.A. Group of Companies 70

71 Annual Report 2008 IV. SIGNIFICANT TRANSACTIONS WITH AFFILIATED ENTITIES Following is a summary of the ETEM Group s transactions with affiliated entities: Purchase of goods, (Amounts in Euro) Sale of goods, services & fixed assets services & fixed assets Receivables Liabilities ΕLVAL SA (**) 450.035 11.062.067 52.333 6.611.146 ΑΝΑΜΕΤ (**) 6.714 8.116.564-12.079 STEELMET ROMANIA SA (*) 5.067.412 23.291 1.010.438 - SOFIA MED (**) 20.625 4.889.717 3.496 694.709 HELLENIC CABLES (**) 1.906.779 490.333 7.702 141.224 STOMANA INDUSTRY (**) 1.322.076 729.327 308.118 95.056 SYMETAL (**) 284.061 1.446.640-684.336 ICME ECAB (**) 668.650 1.359.252 10.423 163.214 PANELKO (**) 6.819 1.233.460 6.819 354.438 Other companies 979.874 4.760.039 542.270 1.592.519 TOTAL 10.713.045 34.110.690 1.941.599 10.348.721 * 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 with subsidiaries & affiliated entities: Purchase of goods, (Amounts in Euro) Sale of goods, services services Receivables Liabilities ALUBUILD SRL 6.411 210.360 2.778.350 553.193 ETEM SCGDOO 1.631.985 1.713 1.662.027 14.642 STEELMET SA 18.821.382 6.101.902 6.000.165 - ETEM SYSTEMS SRL 46.509-641.180 - ETEM SYSTEMS UKR - - - - AL-AMAR 715.959-715.959 - ΕΤΕΜ BUILBING SYSTEMS - - - -2.416 SUBSIDIARIES TOTAL 21.222.246 6.313.975 11.797.681 565.419 (Amounts in Euro) Sale of goods, services Purchase of goods, services Receivables Liabilities ΕLVAL SA (**) 427.977 9.090.944-5.679.451 ΑΝΑΜΕΤ (**) 6.714 8.116.564-12.079 STEELMET ROMANIA (**) 3.086.464 23.291 528.467 - HELLENIC CABLES (**) 1.896.032 45.705 - -3.365 ICME ECAB (**) 668.650 735.364 8.075 166 STEELMET S.A. (**) - 583.876-595.315 METAL AGENCIES (**) 148.772 230.502 152.263 276.511 PANELKO (**) - 305.415-347.619 STEELMET LTD - 258.255-170.562 Other companies 613.210 1.560.867 252.111 454.105 AFFILIATED ENTITIES TOTAL 6.847.819 20.950.783 940.916 7.532.443 GROUP S GRAND TOTAL 28.070.065 27.264.758 12.738.597 8.097.862 * 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 The fees paid to executive officers and members of the management in 2008 amounted to 860.919 (2007: 840.511) for the company and 916.755 (2007: 891.271) for the Group.

ETEM S.A. Group of Companies 72 DETAILED INFORMATION PURSUANT TO ART. 4, PAR. 7 OF L. 3556/2007 a) Share capital structure The Company s share capital amounts to EUR 9.302.855 divided in 30.009.210 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 Associations, 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 divided 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 preemption right whenever the share capital is increased and new shares are made available. iii) A rifth 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. 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. iv) 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 31/12/2008 were as follows: ELVAL S.A.: 58,68% of the share capital (parent company, direct holding) MARKOS KALLERGIS: 9,55% of the share capital VIOHALCO S.A.: 58,68% 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 right 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 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 company s voting rights are 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.

73 Annual Report 2008 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. 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 & Consolidated bond loans 82.500.000, out of which 24.550.000 are short-term ones), include a change-of-control 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.

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75 Annual Report 2008 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 01/01/2008 to 31/12/2008, 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. Magoula, 27 March 2009 Certified by Dimitrios Pavlakis Markos Kallergis Charalambos Papanikolaou Vice Chairman of the Board of Directors Chairman of the Board of Directors Member of the Board of Directors

ETEM S.A. Group of Companies 76 GENERAL ASSEMBLY The General Assembly for the fiscal year 2008 shall be held on Wednesday, 17 June 2009 at the President Hotel (43 Kifisias Ave., Athens) at 11:30 a.m. CONTACT WITH SHAREHOLDERS To obtain information, investors can contact Mrs. Alexandra Tseni and Mrs. Maria Michael, who serve as Shareholders Contact Persons, Tel.: (210) 555 8402, (210) 489 8605 Fax: (210) 489 8510, (210) 555 0457 PRODUCTS ARCHITECTURAL SYSTEMS: Aluminium profiles and parts for doors, windows and facades. Heat-insulating and other systems, powder-coated or anodized. ALUMINIUM PROFILES for industrial and professional purposes: Aluminium bars of various cross-sections and alloys. Special aluminium profiles for the automotive industry and transportation vehicles ETALBOND ESPECIALLY MANUFACTURED SHEETS (SANDWICH PANEL) MADE OF ALUMINIUM WITH INTERMEDIATE POLYETHYLENE INSULATION ΕΤΑLBOND LIGHT

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