Cumerio Annual Report 2006

LOOKING FORWARD

annual REPORT 2006

annual REPORT 2006

Cumerio Broekstraat 31 Rue du Marais 1000 Brussels, Belgium T : +32 2 227 12 22 F : +32 2 227 12 01 info@cumerio.com www.cumerio.com

E

DIVIDENDS If the appropriation of profit proposed is approved, a gross dividend of €0.70 per share will be paid for the financial year 2006 representing:

Content

2

Key figures

4

Strategy

6

Key profitability drivers

8

Copper market

10

Copper Refining

12

Copper Products

16

Sustainability

20

Investor relations

32

Executive Committee

36

Board of Directors

38

Financial review

40

Glossary financial definitions

42

Financial statements

44

Corporate governance

85

Listing

Realization, Concept and lay-out

This English version is the basic version. This report is also available in French and Dutch.

The Crew Central Gate 7th floor Cantersteen 47 1000 Brussels - Belgium T : +32 2 504 00 00 F : +32 2 657 30 49 info@thecrewcommunication.com www.thecrewcommunication.com

Internet

editing

The full report can be downloaded on www.cumerio.com

Forte cvba Effective Industrial Marketing Voskenslaan 97d 9000 Gent - Belgium T : +32 9 244 76 76 F : +32 9 244 76 75

Eurolist on Euronext Brussels

• a net dividend of €0.525 after deduction of a 25% withholding tax on presentation of coupon n° 3 • a net dividend of €0.595 after deduction of a 15% withholding tax on presentation of coupon and VVPR strip n°3.

Annual report

From 27 April 2007 on, payment of dividends on presentation of coupon n°3, and VVPR strip if applicable, at the registered offices and branches of the following institutions :

• Fortis Bank • ING • Bank Degroof • Dexia Bank • KBC Bank • Petercam

Message to the shareholders

ADDITIONAL INFORMATION

Registered Office Cumerio Broekstraat 31 Rue du Marais 1000 Brussels - Belgium T : +32 2 227 12 22 F : +32 2 227 12 01 www.cumerio.com info@cumerio.com Company Number: 0401574852 VAT nr: 873.533.993

Publisher responsible at law Cumerio Media & Investor Relations Frank Vandenborre

Photographs Benny De Grove www.benny-degrove.com Courtesy of LME

Printing JNP Printing

Introduction Looking forward Cumerio is a Belgian company that originated from Umicore’s copper activities in 2005.

The company is listed on Euronext Brussels since 29 April 2005 and has grown to become one of the leading companies in smelting, refining, recycling, and transformation of copper in Europe. It supplies the European market with copper cathodes and products such as wire rod, wire, specialty rod, and profiles, cakes, and billets.

In 2006, Cumerio generated a recurring EBIT of €93.8 million, corresponding to a return on capital employed of 18.2%. Today, the company employs 1,453 people. It operates a copper smelter and refinery in Bulgaria and a refinery and copper products facility in Belgium. The company also produces wire rod and wire in Italy, Europe’s largest wire rod market and holds a majority stake in Swiss Advanced Materials (SAM), a Swiss-based producer of complex profiles.

Cumerio’s strategy focuses on growth. Early 2006, Cumerio decided to expand its smelting capacity and to build a new state-of-the-art refinery in Bulgaria. Cumerio is also looking for growth via acquisitions, mainly in copper products in the higher growth markets, such as South-East Europe.

Message to the shareholders

2006 a grand cru year The year 2006 was an outstanding one for Cumerio. Results show a sharp improvement compared to the already excellent 2005 start-up year. We can all be proud of this achievement. It was a year helped on one hand by the interesting commercial conditions regarding concentrates, scrap materials, and cathodes.

On the other hand, it was a challenging one in the context of increasing energy costs and continued high copper prices. More importantly, our strategy of low cost operator and the addressing of new, high growth markets proved to be the right one.

Cumerio increased its 2006 cop-

per sales to the emerging markets around the Black Sea by 24%.

All of these achievements are reflected in excellent 2006 results.

With a recurring EBIT of â‚Ź93.8 million, Cumerio exceeded its own guidance and surpassed the 2005 figures by 36%. The net recurring consoli-

dated profit ended up at â‚Ź70.4 million, 46% higher than the previous year.

Return On Capital Employed (ROCE) finished at an outstanding 18.2%, despite significantly higher working capital needs, mainly caused by the higher copper prices.

A decisive year for Copper Refining The most important corporate decision was without doubt the launch of the expansion plan for our Pirdop site. Located next to Bulgaria’s copper mines and benefiting from a low cost operational environment, it is the ideal production location for base metals like copper. Based in the Black Sea region, it makes a natural bridgehead for addressing the high growth markets for copper in SouthEast Europe.

A €12 million investment in the smelter will increase its annual output by 15% as from mid 2007. This smelter upgrade will coincide with the planned 55-day general overhaul in the second quarter of 2007.

Since developing copper markets need copper cathodes, Cumerio is investing €70 million in a new stateof-the-art refinery in Bulgaria. It will deliver 180,000 tonnes of cathodes annually to the market, bringing Cumerio’s total annual cathodes output to over 520,000 tonnes.

Start-up is foreseen in the second quarter of 2008.

Better volumes for Copper Products The Copper Products business unit benefited from improved sales volumes. Unfortunately, the high copper prices also put a strain on working capital requirements and resulted in a low ROCE figure.

Cumerio’s growth rewarded by shareholders Cumerio realized an 18.5% increase in share price for 2006.

This improvement reflects the investment community’s confidence in Cumerio’s business story. The company adheres to proactive and transparent communication with shareholders and financial analysts.

These efforts have been rewarded by the Belgian financial community: as best communication in the midcap segment and as best investor relations.

Values and people matter!

Any company strategy has to be supported and carried forward by a strong organization and more specifically by competent people.

In the course of 2006, focusing on its future growth, Cumerio further strengthened its organization by hiring a number of senior managers for key positions and some young professionals.

A set of common values indicates the social, environmental, and ethical criteria for management. A new Code of Ethics has been instituted in 2006, ensuring compliance as a responsible corporation. Cumerio’s commitment to sustainable development is also expressed in a number of actions and investments in environmental protection, recycling, employee development, and community relations. It receives a specific focus in this annual report.

2007, a positive and decisive year!

In February, Cumerio issued guidance for 2007 with recurring EBIT that exceeded by far all analysts’ expectations. This is the result of a better cathode producer premium and an improved outlook for the Copper Products business unit, partly compensating for a cyclical downturn in treatment and refining charges and a less interesting €/US$ exchange rate.

On the operational side all eyes will be fixed on the general maintenance shutdown in Pirdop, Bulgaria and the related investments for capacity extension. Despite this, Pirdop will produce 230,000 tonnes of anodes, only slightly below the 2006 figure.

Strategically, Cumerio will look for future growth opportunities along the copper value chain and in emerging markets. This will continue the company’s track record beyond the current organic growth initiatives in Bulgaria.

Finally, it is clear that Cumerio’s success and future is founded on the dynamism, competency, and motivation on the part of all its employees. We expressly thank each and every one for their efforts, their continued trust in copper, and the results that were derived from it.

With them, we feel confident about taking the next significant step for strategic growth.

The acquisition of a majority stake in Swiss Advanced Materials (SAM) is a strategic reinforcement for the business unit. It will further enhance our ability to address very demanding copper applications.

Luc Delagaye

Karel Vinck

Chief Executive Officer

Chairman

Lorem Key figures

(€ million)

2004

2005

2006

1 524.8 208.6

1 965.6 275.3

3 395.3 318.4

19.7 - - 19.7 9.4%

69.1 (5.4) 1.2 64.9 25.1%

93.8 1.8 3.3 98.9 29.5%

Net consolidated profit (loss), Group share 15.5 Net consolidated profit (loss) before 9.1 non-recurring items and IAS 39 effect, Group share

42.7 48.1

72.5 70.4

EBITDA - Recurring

49.5

100.8

132.4

Capital Expenditure Cash Flow before Financing Consolidated net financial debt (end of period)

19.3 19.6 119.7

17.3 83.1 62.8

48.5 (32.5) 131.9

Net debt / (Net debt + Equity) (end of period) %

28.9%

15.6%

24.8%

Capital Employed (end of period) Return on Capital Employed (ROCE) %

413.0 4.0%

398.6 17.2%

522.9 18.2%

Total shares outstanding (end of period)

na

25 702 075

25 702 075

EPS declared (€/share) - basic EPS adjusted (€/share) - basic

0.60* 0.35*

1.66 1.87

2.84 2.75

Workforce (end of period)

1 553

1 513

1 453

Turnover Revenues (excluding metals) EBIT - Recurring EBIT - Non-Recurring EBIT - IAS 39 effect EBIT - Total Recurring EBIT margin %

Figures for 2005 recasted to reflect the implementation of IAS 19 - * Based on the numbers of shares outstanding at 29 April 2005

Contribution to recurring EBIT (€ million)

2004

2005

2006

Copper Refining (1) Copper Products (2) Unallocated (3)

14.5 5.3 (0.1)

66.9 5.7 (3.5)

93.2 8.2 (7.6)

TOTAL

19.7

69.1

93.8

Figures for 2005 recasted to reflect the implementation of IAS 19

Includes the smelting and refining operations in Bulgaria and Belgium Includes the production of wire rod, specialty rod, shapes and wires in Belgium and Italy. It also includes the production of complex copper profiles in Switzerland (SAM) (3) Includes mainly corporate costs (1) (2)

Share Price evolution €/share 25 € 18.20 +18.49%

20

15

10

01/01/06

28/02/06

29/04/06

28/06/06

27/08/06

26/10/06

29/12/06

MONTHLY AVERAGE Trading VOLUMES Jan 06

274 844

Feb 06

243 326 219 745

Mar 06

208 583

Apr 06 May 06

277 717

June 06 July 06

159 130 63 492

Aug 06 Sep 06

145 503 83 560 154 937

Oct 06 Nov 06 Dec 06

00

113 204 76 260

50 000 50000

100 000 150 000 200 000 250 000 300 000 100000 150000 200000 250000 300000

Strategy

Construction new refinery in Pirdop, Bulgaria

Looking forward, boosting growth State-of-the-art assets, financial stability, early presence in emerging markets, and full flexibility. Cumerio holds all the right cards to further deploy its strategy: focus on growth, both organically as through acquisitions and partnerships. The company has set out four strategic pillars for realizing the company’s growth ambitions.

The company aims to achieve growth by following its four strategic pillars: • Maintain and improve operational excellence • Secure long-term supply of copper concentrates and strive for further diversification of feeds • Expand refining activities • Establish copper products activities in emerging markets and focus on more added-value products

Maintaining and improving operational excellence Its continuous strive for operational excellence enables Cumerio to produce at low cost. This is a key competitive factor to remain at the top in a commodity business such as the base copper production industry.

Cumerio’s smelting operations in Bulgaria rank fourth worldwide

in terms of direct cash production costs. It achieved this position thanks to: • The state-of-the-art Flash smelting technology • The significant investments since the acquisition of the plant in 1997, mainly in modernizing and optimizing the processes • The advantageous labour and energy cost • The presence of highly skilled staff, specifically knowledgeable in process and supply optimization.

In February 2006, Cumerio has announced more investments in Bulgaria to further improve operational efficiency. The construction of a new refinery will triple the capacity of the current one and position it as a worldwide cost leader, just like the smelter. In addition, the de-bottlenecking of the smelter will increase its efficiency and expand annual capacity to 275,000 tonnes.

In the late nineties, Cumerio also invested in a totally new refinery in Olen, Belgium, equipped with stateof-the-art FSD (Full Size Deposit) technology. This together with the substantial metallurgical expertise available in the company, enabled the Belgian plant to operate at full capacity, disregarding changing supply sources.

Operational excellence also translates in financial performance. In that context, Cumerio endeavours to further optimize its use of working capital and proactively manages its components: inventories and payment terms.

Long-term supply security and more diversification of feed Cost excellence in the copper business is only possible if production, in particular the smelting and refining operations, runs smoothly. Cumerio has to guarantee a continued inflow of supply since any interruption has an almost immediate substantial negative impact on cost. For this reason, Cumerio holds a diversified portfolio for its supply of concentrates, anodes, scrap, and cathodes and has negotiated long-term supply contracts. This enhances stability and provides also a solid base for Cumerio’s growth strategy.

Cumerio’s smelter location, next to two important Bulgarian mines, is also an important factor in securing a stable supply.Today, more than half of Cumerio’s feed comes from mines in

Bulgaria and its surrounding countries.

As the only sustainable operation in the region, the Pirdop smelter is the natural hub for these concentrates.

It has also developed quite some expertise in treating this generally lower grade material. To the extent possible, Cumerio will further develop sourcing in the Black Sea region. The remaining part of the concentrates is being sourced internationally, mainly from South America.

More copper and high addedvalue products in emerging markets

On the other hand, Cumerio is increasing its recycling of copper scrap.

In 2006, about one third of the total amount of cathodes produced originated directly or indirectly from scrap.

Expanding copper refining activities

On the other hand, Western Europe is still an interesting market for copper specialties in specific niche segments. A first move in the direction of high added-value products is the acquisition of Swiss Advanced Materials (SAM), a Swiss producer of complex copper profiles based on specialty rod.

Cumerio’s state-of-the-art refining assets are key for guaranteeing its longer term cost leadership and for remaining profitable. The company’s investments in Belgium in the late 1990s have enabled it to take and maintain a leading position in the Western European market.

Furthermore, the division is looking for real growth opportunities by developing activities in new emerging markets, whereby South-East Europe is of specific interest. All the ingredients are available to set up a products business in that region, preferably via acquisitions.

In addition, operating modern refining and smelting technology in Bulgaria poses major growth potential as well. It offers vast opportunities to take a leading role in supplying the emerging Black Sea market with high quality copper cathodes. It confirms Cumerio’s local number one position as copper producer.

The announced investments will increase Cumerio’s smelting and refining capacity. The de-bottlenecking of the Bulgarian smelter will increase annual capacity up to 275,000 tonnes as from mid 2007 on. The new stateof-the-art FSD refinery, currently under construction, will gradually ramp up Cumerio’s total cathodes output to 520,000 tonnes per year.

Cumerio’s Copper Products business unit holds a leading position in Western Europe. Although on the longer term it is a rather stagnating market, the focus is to consolidate this position qualitatively, both in terms of market share and profitability.

Key profitability drivers

Anode casting in Olen, Belgium

Cumerio’s results are driven by a number of external commercial factors. The price of copper is not a significant driver for Cumerio’s profitability.Treatment and refining charges for copper concentrates, refining changes on scraps. The cathode producer premium, and the premium for copper products have a greater impact.

Treatment and refining charges (TC&RCs) TC&RCs are the terms obtained from miners to smelt concentrates and refine the resulting anodes. When the market is in oversupply, meaning there are more concentrates available than there is smelting capacity, TC&RCs typically increase. The opposite will occur in the event of a shortage of concentrates and an excess of smelting capacity.

Cumerio’s short-term sensitivity to TC&RCs is determined by the volume of concentrates used for producing anodes. Based on 2006 figures, each increase/de-

crease of 1 US cent per pound in TC&RCs resulted in an increased/ decreased EBIT contribution of approximately US$5 million.

Cumerio has decided to secure most of its future concentrates requirements under long-term supply contracts of three to eight years.

The TC&RCs applicable under those contracts are negotiated annually. In the concentrates business, there are two main negotiation periods. Some contracts are negotiated at the middle of each year; while the largest portion is negotiated at the end of each year. This is the so-called mating season. The first negotiations typically take place between miners and Japanese and Chinese smelters.

The resulting TC&RCs are then considered as a benchmark for the industry as a whole.

Cumerio buys more than half of its concentrates feed in the Black Sea region, close to its smelting facility. The resulting logistic advantage has enabled the company to benefit from higher effective TC&RCs than the benchmark. This presents Cumerio with a significant competitive advantage over its principal European competitors.

Cathode producer premium The cathode producer premium is the premium charged for LME grade A quality copper cathodes on top of the price for copper. It is the premium at which Chilean cathodes are sold under annual contracts basis Antwerp or Rotterdam. European refiners use this premium as a benchmark.

The producer premium is determined by the balance between supply and demand for copper cathodes. It also reflects transport costs between producers and consumers of cathodes.

Since 2004, continued tightness in the availability of cathodes has led to a significant increase in the producer premium: US$115 per tonne in 2005, US$105 per tonne in 2006, and even US$125 per tonne in 2007.

Earnings sensitivity is linked with Cumerio’s annual production volume of cathodes. At current annual production levels of 400,000 tonnes, each US$10 increase/decrease in the premium results in a US$4 million increase/decrease in Cumerio’s operating results.

Refining charges (RCs) RCs are the terms that refiners, such as Cumerio, obtain from suppliers of anodes, blister, and scrap for refining them into copper cathodes. The RCs are driven by the balance between supply and demand for those products.

Cumerio purchases anodes, blister, and scrap material to feed its refinery in Olen, Belgium. The company also sells anodes and blister in Bulgaria as a result of its prevailing shortage in refining capacity. This will change however when the new Pirdop refinery becomes operational in the second quarter of 2008.

€/US$ currency rate A considerable portion of Cumerio’s revenues are US$-denominated. Still, most costs are in euro or Bulgarian lev, which is linked to the euro. As a result, Cumerio’s profitability is sensitive to the €/US$ exchange rate.

At 2006 average rates and disregarding any built-in hedges, each US cent increase/decrease in the €/US$ exchange rate led to a decrease/increase of Cumerio’s operating results of approximately €1.8 million.

This sensitivity is subject to changes in the level of the €/US$ exchange rate. It also depends on Cumerio’s total US$ exposure. The latter is impacted by, among other things, the level of TC&RCs, RCs, and cathode producer premium.

Metal Prices The copper price is affected by the supply and demand balance for refined copper. When the market for refined copper is in deficit and demand exceeds supply, the copper price will tend to go up and vice versa.

The copper market has been in deficit since 2004, as evidenced by continued low cathode inventories on the main metal exchanges. This situation has led to the strongest rally in copper prices since the 1970s.

The price for copper has limited impact on Cumerio’s profitability compared with TC&RCs and the cathode producer premium. The sensitivity is a result of several factors, including the price participation clauses in copper concentrates contracts, the rather positive impact that copper prices have on the availability of and terms for copper scrap, and the existence of metal surpluses.

• Price participation Price participation is one of the side clauses in contracts between miners and smelters whereby both parties agree to share part of the benefit or loss that results from a copper price which exceeds or falls below an agreed upon level.

Cumerio has generally benefited less from price participation than many of its competitors. Most of its contracts were negotiated in the late 1990s at a time when copper prices were extremely low.

• Refining charges on copper scrap Refining charges on copper scrap are the terms obtained from scrap suppliers to compensate for the necessary costs from refining scrap material into cathodes. When copper prices increase, the availability of secondary copper tends to rise as well, leading to higher refining charges. About one third of the feed for Cumerio’s refinery in Olen, Belgium, originates directly or indirectly from copper scrap.

• Metal surpluses Contracts for raw materials take into account the fact that some metal is lost during the metallurgical phase, for instance in slags.

A strict and efficient process control can reduce these losses and generate metal surpluses. The value of these surpluses will increase as metal prices rise. This applies mainly to copper, gold, and silver.

Increasing copper prices also lead to increasing working capital requirements and reversely.

10

Copper market

Codelco’s El Teniente underground mine, Chile

Record copper prices in a continued tight market In 2006, the price for copper rallied further to reach new historical highs, while publicly held copper inventories remained low. During the second half of the year, however, the situation changed and the copper market shifted from backwardation to contango.

Nevertheless, supply remained tight and demand increased worldwide.

An unexpected shift on the copper market Contrary to general expectations, the copper price did not reach its peak in 2005. The price for copper continued its upward trend to reach a record new level in May 2006 close to US$8,800 per tonne. The price remained very high throughout the rest of the year. In addition, copper inventories were very low on all of the metal exchanges.

During the last quarter of 2006, the copper market was sending mixed signals. The price for copper started to decrease slightly and the inventories on the London Metal Exchange (LME), Comex, and Shanghai Metal Exchange picked up. This evolution was triggered by the expectation of a weakening economy in 2007, a sentiment nourished by the figures on the US housing market that have already given rise to fund liquidation and short selling.

At the close of the year, publicly held inventory had more than doubled compared to 2005, up to 225,000 tonnes. This is still only five days of world consumption. Moreover, most of the inventories are situated in Asia and the US. Given these evolutions, the pressure on short-term demand relieved and copper forward prices gained ground on the copper cash prices.

Copper prices vs Metal Exchange inventories US$/tonne 10 000

’000 tonnes 800 700

9 000

æ LME+Comex stocks æ Cu-price Cash æ Cu-price 3 m

600

8 000

Copper market remained tight Over the past year, mining companies were not capable of meeting worldwide demand. A number of supply disruptions, among other things, was one of the main reasons for this. Operational difficulties such as the tunnel collapse in Chuquicamata, Chile, the temporary production stop in the Indonesian Grasberg mine, and some logistic issues had an immediate effect on worldwide supply in 2006.

On the other hand, labour negotiations did not affect the supply side as much as expected. Apart from the mine strike in Escondida, Chile, other negotiations on new collective labour agreements did not cause for supply disruptions.

Worldwide increase of copper consumption Worldwide consumption of copper was up by 3.4% compared to 2005, according to Brook Hunt figures.

Western Europe performed extremely well with a 7% increase.

06 2/ /1

06 29

7/ 17

/0

4/ /0 24

1/ /0 30

1/ /1 03

8/ /0 11

5/ /0 19

5/ /0 19

2/ /0 24

2/ /1 02

9/ /0 09

6/ /0 17

3/ /0 25

1/ /0 01

Since November 2006, the cashto-three-months difference turned from a situation of backwardation into one of contango, one where the forward price is higher than the cash price for copper.

06

2 000

06

0

05

3 000

05

100

05

4 000

05

200

05

5 000

04

300

04

6 000

04

400

04

7 000

04

500

an important driver for worldwide consumption of copper. Their yearly consumption of four million tonnes still represents around 22% of the worldwide total. But China’s appetite for refined copper was particularly subdued over the balance of the year. This was reflected in a sharp decline of its refined copper imports, a drop of more than 25% compared to 2005. The main reasons are the more stringent import policy, local de-stocking at end-product manufacturers, and the Strategic Reserves Bureau selling important volumes of copper. The increased output from Chinese mines also lowered the need for import.

The US, South Korea, and China did not meet the expected consumption levels. China, however, remains

Copper market highlights Copper price: • Maximum: US$8,788 per tonne on 12 May • Average: US$6,727 per tonne •C losing: US$6,290 per tonne

Exchange inventory (LME + Comex): • Maximum: 217,000 tonnes on 31 December • Minimum: 94,000 tonnes on 2 January • Average: 138,000 tonnes

12

Copper refining

Continuously improving profitability 2006 was a strong financial year for Cumerio’s Copper Refining unit, reflected in an EBIT of €93.2 million and a Return On Capital Employed (ROCE) of 32.2%. This is the result of continued excellent operational performance in both smelting and refining and beneficial external conditions. The year was also marked by Cumerio’s investment decision to further strengthen its position in the promising Black Sea Region.

Key Figures - Business Unit Copper Refining (€ million) Turnover Revenues (excluding metals) EBIT - Recurring EBIT - Non-Recurring EBIT - IAS 39 effect EBIT - Total Recurring EBIT margin % EBITDA - Recurring Capital Expenditure Capital Employed (end of period) ROCE % Workforce (end of period) Figures for 2005 recasted to reflect the implementation of IAS 19

2004

2005

2006

1 137.0 146.1 14.5 - - 14.5 9.9% 38.8 14.5 306.8 4.0% 1 192

1 482.6 214.0 66.9 (3.8) 1.1 64.2 31.3% 94.1 12.2 277.4 22.6% 1 149

2 572.0 246.4 93.2 1.8 2.5 97.5 37.8% 123.5 40.5 316.3 32.2% 955

Copper production in line with 2005 During 2006, Cumerio’s smelter in Bulgaria produced a total of 238,500 tonnes of copper anodes. In the first half of the year, the smelter in Pirdop, Bulgaria, was temporarily shut down for some necessary maintenance. This intervention has not significantly affected the full-year production of anodes, which was only slightly lower than in 2005. The plant in Olen, Belgium, produced 103,000 tonnes of anodes out of scrap and blister material.

The company’s refining installations in Bulgaria and Belgium combined for a total production of 408,000 tonnes of copper cathodes. The Pirdop refinery produced a total of 65,500 tonnes of copper cathodes, about 8% more than the year before. Cathode production in Belgium was again at full capacity with 342,600 tonnes.

Anodes Production ’000 tonnes 400 300

114

200 181

106 213

113

103

227

240

239

2004

2005

2006

97

100 0

2002

2003

æ Pirdop æ Olen* Anodes produced from blister copper and copper scrap.

*

Cathodes Production ’000 tonnes 500 400 300

41 318

46 325

55 343

60

65

341

343

2002

2003

2004

2005

2006

200 100 0

æ Olen æ Pirdop

14

These favourable conditions amounted to a total effective TC/RC/PP of approximately 31 US cents per pound of copper for 2006, exceeding the market benchmark of 23.9 US cents. This is primarily the result of price participation and Cumerio’s logistic advantage of being close to the main concentrates suppliers in the Black Sea area.

’000 tonnes 600

¢/lb 30

26.9 26.3

23.1

400

17.3 16.8 19.3

18.1 200

23.9

22.2

20

17.4

15.0

0

11.0

10

-200

06

05

20

04

20

03

20

02

20

01

20

00

20

99

20

98

19

97

19

19

96

0

95

-400

19

Year 2005 ended with a surplus of copper concentrates on the market.

This led to an increase of contracted treatment and refining charges (TC&RCs) in 2006. In addition, Cumerio was able to benefit from higher levels of price participation (PP) than initially expected, following contract negotiations during the second quarter.

Long-term market TC&RCs* vs copper concentrates balance

19

Favourable conditions for treatment and refining charges

æ Concentrates balance æ TC&RCs (Japanese long-term in current US$) Source: Brook Hunt Q4 2006

*

Based on 30% copper content

Lorem

Cathode producer premium remains high At the close of 2005, the market for copper cathodes was still very tight.

As a result, the cathode producer premium for 2006 was set at US$105 per tonne of copper cathode. An excellent operating performance enabled Cumerio’s refining activities to benefit from such a high premium.

At the close of 2006, the tight situation was expected to continue.

This sentiment is reflected in an even higher premium of US$125 per tonne set for 2007.

Annual Cathode Producer Premium US$/tonne 120

115

100

105

80 60 40

60 38

38

2002

2003

20 0

Positive contribution from copper cathodes scrap conditions Over the past year, certain evolutions positively affected Cumerio’s position on the copper scrap market. A stricter import policy in China led to considerably lower purchase levels of copper scrap compared to 2005. In addition, the continued high copper price supported a good offering of copper scrap material. As a result, there was ample supply of secondary copper and recyclers, such as Cumerio, gained a stronger bargaining position. This resulted in improved refining charges for Cumerio on copper scrap.

2004

2005

2006

Cumerio sells stake in NFI In December, Cumerio announced the sale of its 8.8% interest in Non Ferrous International (NFI).

NFI, through its operating subsidiary Metallo-Chimique, is a leading European recycler of non-ferrous materials with operations in Beerse, Belgium and Bilbao, Spain. In the context of the transaction, the nonsecured subordinated loan facility granted by Cumerio will be fully repaid, including interests. The transaction is expected to be completed during March 2007. Cumerio and MetalloChimique have extended the supply contract until 2015.

Why invest in Bulgaria?

At the end of 2004, Cumerio had invested more than US$300 million in its copper facility in Pirdop, Bulgaria. The company will continue its local investments for various reasons: • The Black Sea region is a promising copper market - local consumption accounts for approximately 700,000 tonnes of copper and is expected to grow at an estimated rate of 4% to 6% per year • Historically, the local smelter

Further paving the way as a trustworthy partner for the Black Sea Region

was already equipped with state-of-the-art Flash smelter technology. Since the acquisition in 1997, Cumerio’s investments have turned it into the sole sustainable copper smelter in South-East Europe • The presence of copper mines in Bulgaria and the surrounding countries was and still is a major advantage on which Cumerio can build a profitable activity •B ulgaria offers ample experienced and high-skilled staff with a long tradition in the copper industry

• Low costs for labour and energy make Bulgaria an interesting region for expansion, especially in a commodities business • The tax structure in Bulgaria offers considerable advantages up to 2006, Cumerio benefited from a 10.5% corporate tax rate, negotiated in the context of the acquisition of the Pirdop assets in 1997. As of 2007, Cumerio will pay the normal tax rate, which will decrease from 15 to 10%.

Cumerio’s Sales Evolution in the Black Sea region ’000 tonnes 150 125 100

Cumerio’s plant in Pirdop, Bulgaria, is a strong bridgehead for further expansion in the emerging Black Sea market. By starting up two major investment programmes, Cumerio reinforces its presence in the region as an important and reliable cathode supplier.

75 50 25 0

2002

2003

2004

2005

æ Cathodes æ Anodes

In 2006, Cumerio has decided to invest €12 million for the debottlenecking of the smelter. This project will increase local anodes production up to 275,000 tonnes per year as of mid 2007. Works will start simultaneously with the scheduled maintenance shutdown in the second quarter of 2007.

At the same time, the smelter will be prepared for future low-cost expansion, without the need of a major shutdown.

Breakdown feed Pirdop, Bulgaria by origine

Last August, the Bulgarian Prime Minister attended the ground-breaking ceremony for the construction of a new refinery in Pirdop. This €70 million project will increase local annual production capacity to 180,000 tonnes of cathodes as of the second quarter of 2008.

It will enable Cumerio to follow

growing market demand for copper cathodes in the Black Sea region and become an even more reliable and sustainable partner for local producers of copper products.

æ Bulgarian concentrates æ Regional concentrates æ International concentrates 37%

45%

18%

2006

16

Copper products

First signs of a changing market environment The growing demand for copper products in Western Europe has significantly benefited Cumerio’s business. Although high copper prices and increased energy costs had impacted the sector’s profitability. Cumerio was also able to negotiate a compensation for increased costs during the second half of the year. In 2006, it also took an important step to further strengthen its specialty rod business.

Key Figures - Business Unit Copper Products (€ million) Turnover Revenues (excluding metals) EBIT - Recurring EBIT - Non-Recurring EBIT - IAS 39 effect EBIT - Total Recurring EBIT margin % EBITDA - Recurring Capital Expenditure Capital Employed (end of period) ROCE % Workforce (end of period) Figures for 2005 recasted to reflect the implementation of IAS 19

2004

2005

2006

1 071.8 62.5 5.3 - - 5.3 8.5% 9.4 2.3 99.4 3.4% 361

1 226.0 61.3 5.7 (0.6) 0.1 5.2 9.3% 9.8 3.6 115.0 4.7% 349

2 216.6 72.0 8.2 0.8 9.0 11.4% 13.6 5.3 203.6 2.1% 351

Improved delivery volumes

Compensation for increased costs

2006 was characterized by good demand in all consumption areas.

Cumerio realized an 8.2% increase in sales volumes for wire rod up to a total of approximately 406,000 tonnes.

At the close of 2005, Cumerio negotiated next year’s product premium based on a stabilizing copper price.

But, contrary to expectations, the copper price climbed to new heights.

As a result, the 2006 premium did not provide sufficient compensation for the increased working capital needs and for increased costs, such as for energy. The increased costs had a significant impact on performance of the business unit throughout the year.

Specialty rod represented close to 14,800 tonnes.This is a 9.9% increase, compared to deliveries in 2005.

Deliveries of cakes and billets were stable at 84,800 tonnes compared to 84,500 tonnes in 2005.

Copper prices impacted the performance of the business Although 2006 deliveries exceeded 2005 figures, the volumes could have been even better. The high copper price dramatically increased the credit risk exposure and, as a result, Cumerio had to stop responding to the increasing demand from customers in some cases. The high copper price also significantly impacted the working capital needs of Cumerio. The company has tried to control these effects to the extent possible through proactive management of inventories and payment terms.

In the second half of the year, Cumerio was able to convince its customers of the inconsistency of the agreed terms. Consequently, the company could charge an additional financial contribution for its contracts.This led to better performance of the business in the second half of the year, despite the usual impact of seasonality.

The high copper price leads to a changing market environment

18

The financial situation throughout the industry was put under pressure by the high copper price. As a consequence, one of our competitors, Prysmian, decided to shut down its UK Prescott wire rod plant. This way, a capacity of approximately 150,000 tonnes of wire rod disappears from the market in 2007. Taking into account a continued strong demand, this will result in a tighter supply for wire rod in Western Europe. It is expected that this would lead to better commercial terms for wire rod producers.

Lorem

Creating added value in specialty rod Early May 2006, Cumerio took an important step to further develop its specialty rod business. The company acquired a 51% majority stake of the shares in Swiss Advanced Materials SA (SAM).

Copper Products Deliveries ’000 tonnes 2002

367

79

2003

364

80

2004

407 375

2005 2006

84 406

0

100

200

300

94

400

85

500

600

æ Wire rod æ Shapes GEOGRAPHICAL BREAKDOWN COPPER PRODUCTS deliveries 6% 15% 37% 6% 10% 12%

14%

SAM develops, produces, and sells complex profiles for electro-technical industries based on copper and low-alloyed copper. This experience will enable Cumerio to enter into new high added-value products with SAM as a platform for research and development.

A complex profile produced by SAM

æ Italy æ Benelux æ Germany æ France æ Spain æ Other Europe æ Other World

2006, a good year for copper wire in Western Europe 2006 has proven to be a very good year for Europe in terms of consumption of copper wire and cable. According to CRU Monitor January 2007, total consumption of wire rod in Western Europe accounts for 2,300,000 tonnes, a rise of 4.2% compared to the previous year. Italy, the largest market in Western Europe and Cumerio’s main market, performed particularly well - up by 5% to 550,000 tonnes. Germany is the second largest market in Western Europe, consuming close to 500,000 tonnes.

Western world refined copper consumption - 2006 by first use æ Wire Rod æ Sheet/Strip æ Tube æ Cu Alloys æ Other

11%

17% 54% 10% 8%

Western world refined copper consumption - 2006 by market sector 11% 11%

The European market continues to be driven by a strong demand for power cables, both from the utility and industrial sectors. The special cable markets such as the automotive and railway sector also showed good demand.

Source: Brook Hunt Q4 2006

37%

æ Construction æ Electronic products æ Industrial Machinery æ Transport æ Consumer Products Source: Brook Hunt Q4 2006

15%

26%

20

Sustainability

Cumerio finances the kindergarten in Zlatitsa, Bulgaria

Remaining a profitable and sustainable company in the long-term Cumerio is committed to the principles of sustainable development. It wants all of its products and activities to be beneficial for all of its stakeholders: investors, customers, suppliers, staff, and neighbours. That is the reason why the company is equally dedicated to stepping up to its social responsibilities and to reducing the impact of its operations and products on the environment.

Care for the environment

Open and honest dialogue with employees

Cumerio realizes that the nature of the base metal industry has a considerable impact on the environment. In this context, the company is making every effort to improve its environmental performance in respect of legal requirements and beyond.

Cumerio’s environmental management systems, its investments in energy efficient installations, and its continuous efforts in recycling attest to its long-term engagement.

As a socially responsible employer, Cumerio values good relationships throughout the group. The company strives to create optimal conditions for mutual understanding and bilateral collaboration through clear communication with all employees and their representatives. Additionally, Cumerio guarantees all of its employees a safe and healthy work environment.

Supporting the surrounding communities

Profitability supports sustainability

Cumerio is a responsible corporate citizen in the communities where it is active. Besides contributing to the local economy by generating employment and paying taxes, the company invests in good relations with local authorities. Cumerio regularly sits down with local mayors to increase mutual understanding.

Cumerio also contributes directly to local development. In Bulgaria, for instance, the company has invested in new school infrastructure and finances regular health checks for inhabitants of the Pirdop-Zlatitsa region.

Cumerio aims to remain a strong and profitable player for its shareholders. By investing in its processes and by looking for new applications the company strives to guarantee its continuity into the future.

Environmental management systems As a responsible company, Cumerio has put a system in place to assess its interactions with and impact on the environment. The company uses the ISO 14001 norm as its primary reference in aligning day-to-day industrial activities with sound environmental policies and management. Since 2006, all its operations are fully ISO 14001 certified.

All Cumerio sites ISO 14001 certified 22

Cumerio uses the newest version of Lorem the ISO 14001 norm as its environmental management working tool.

Today, all of Cumerio’s operations are fully certified: • Belgian sites in Olen and Brussels received their ISO 14001 certificate in October 2006 • Cumerio’s Bulgarian plant obtained its certificate in March 2006 • Cumerio Italia has been certified since the end of 2005.

Continuously improving environmental performance All Cumerio subsidiaries are periodically and thoroughly audited by an external accredited auditor. The Environmental Management System (EMS) of each site is reviewed regarding its performance and effectiveness.

Cumerio’s EMS ensures that care for the environment is embedded in every aspect of its production process. It maps all of the processes and how they affect the environment, including among others, noise, emissions into the air and water, and the use of hazardous materials. Based on this information, new procedures and instructions are defined to minimize environmental impact. Constant monitoring of the various processes enables Cumerio to follow up and continuously improve environmental performance.

Close monitoring of Environmental management system effectiveness Cumerio periodically evaluates the appropriateness and effectiveness of its site-specific environmental management systems. Environmental management reviews monitor and follow up the progress in environmental performance as well as the evolution in related legislation. This enables the reviewers to evaluate the compliance of Cumerio’s operations with environmental targets and standards. Management then formulates recommendations based on this review and launches new action plans and projects to promote progress along the path of continuous improvement.

Managing the environment with ISO 14001 The ISO 14001 norm is an international framework for benchmarking environmental management systems. The norm prescribes: • A clear environmental policy with concrete goals, training, and alerting staff to environmental issues • An inventory of all environmental aspects on which the company has an impact • An action plan to reduce the environmental impact of the company’s activities and decisions.

ISO 14001 helps companies deal with anomalies.It also enables them to improve environmental performance by fine-tuning their environmental management system.

Once the certificate has been granted, it is in effect for three years. During this period, accredited organizations will regularly audit the company’s environmental efforts.

Harmonizing Cumerio’s vision on the environment In 2006, Cumerio appointed an internal Group Environmental Auditor. This function underlines the company’s intent to streamline its site-specific initiatives into a common environmental approach. Cumerio will harmonize all site-specific environmental policies into a uniform structure and align environmental evaluation systems and improvement logs.

Minimization of environmental impact Cumerio strives to minimize the interaction of its operations with the environment. The company has embarked upon a multilayer action plan to structurally reduce emissions into air and water and to limit waste production.

State-of-the-art wastewater treatment Over the past year, Cumerio significantly improved the efficiency of its water treatment facilities on all sites.

This initiative ensures that all installations operate well within the applicable standards for industrial processes.

For instance, the new state-of-theart wastewater treatment plant in Bulgaria has significantly reduced the emission of metals in the plant’s wastewater stream.

The focus is on both the physicochemical treatment and the improved containment of wastewater. For instance, Cumerio totally revamped the water network at its Italian plant in 2006. In Bulgaria, Cumerio’s IPPC investment programme includes a €4 million budget for repair and partial replacement of the sewage network at its Pirdop plant. Most of the work will be performed throughout 2007.

A structural downward trend for air emissions Cumerio is committed to progressively reduce its air emissions. In 2006, the company allocated two third of the €30 million IPPC investment programme to realize yet another breakthrough in the treatment of secondary flue gases in Pirdop, Bulgaria. The company will install an additional scrubber and bag house filter system. This will enable Cumerio to be fully compliant with the new IPPC emission standards for which it already holds the necessary permit. The new norms for Cumerio

will go into effect end October 2007.

In addition, Cumerio Belgium capitalized on the planned replacement of the waste heat boiler in its anodes casting facility to completely reassess the existing design of its off-gas circuits. Besides spectacularly improving on past performances in the domain of energy recuperation and fugitive emissions, the re-engineered concept will materialize in a vast improvement of emission data, both in terms of emission volume and emission load (heavy metals, dioxin).

Tailings pond, a safe solution for smelter waste disposal As copper concentrates typically contain only 30% copper, most of the material ends up in a slag, generating a significant waste stream.

Cumerio decided to process these slags further to recover a maximum of metal and then retain the final waste, so-called fayalite, in a specially engineered disposal pond on site.

This pond has been designed to prevent any leakage into soil and ground water.

In-depth technical-economic studies of alternative methods have revealed that the current approach conforms to Best Available Technology to prevent or reduce emissions and impact on the environment, taking into consideration costs and advantages. It provides the most reliable and safe way to minimize the potential environmental impact.

Meeting Kyoto obligations Cumerio is actively involved in the Benchmarking Covenant. This initiative was introduced by the Flemish authorities to help implement the obligations resulting from the Kyoto protocol. According to this covenant, energy intensive industries located in Flanders must meet or exceed the top world standards and techniques in terms of energy efficiency and consumption reduction no later than 2012.

With the support of certified external consultants, Cumerio has developed an energy plan in line with those requirements. Based on reasonable assumptions, the progress already achieved in terms of energy efficiency, as well as the investments that have already been implemented and planned, should enable Cumerio’s Olen site to comply with these requirements.

Cumerio Med is involved in the Bulgarian National Scheme as well.

This plan went into force as of 2007 as a result of Bulgaria’s accession to the EU. This scheme provides for emission permits issued and monitored by authorities on a case-bycase basis, depending on industrial and technical parameters for each combustion installation.

Cumerio Med has already received its emission permit but is not yet informed of the CO2 allowances that will be allocated by the Bulgarian authorities to our industry.

Cumerio monitors metals and dioxins deposition in Olen, Belgium

Sampling the Kiselo Sere River in Pirdop, Bulgaria

Respect for natural resources Recycling Recycling is an important aspect of sustainability, especially so at Cumerio.

The company produces approximately one third of its entire volume of cathodes out of secondary materials, both through close collaboration with scrap suppliers and through far-reaching optimization of its refining processes.

Recycling copper leads to important savings

24

Lorem Copper is a metal

that can be recycled indefinitely. Cumerio capitalizes on this unique characteristic and uses lots of copper scrap as additional supply source for its production lines. This allows the company to save on both energy consumption and waste disposal. In addition, the refining charges that the industry receives for treating secondary copper are a most welcome add-on to the revenues from treatment and refining charges on copper concentrates.

Approximately 140,000 tonnes of cathodes from copper scrap

Close ties with the recycling industry

Over the years, Cumerio has continued its efforts in recycling copper. In 2006, Cumerio produced approximately 140,000 tonnes of cathodes from recycled copper. This accounts for 34% of the company’s total cathode output. Cumerio’s Contimelt process in Olen, Belgium, has been specifically designed to handle large amounts of copper scrap in an efficient and environmentally sound way.

To safeguard the inflow of vast amounts of secondary copper, Cumerio has progressively expanded its presence in the recycling market and capitalized on partnering with major recyclers. One of them is Metallo-Chimique, the second largest recycler in Europe. In 2006, they delivered approximately 20% of the anode feed for Cumerio’s Belgiumbased refining operations. To ensure this inflow of secondary copper, Cumerio has renewed its partnership with this company through 2015.

Energy efficiency Improving energy efficiency makes economic and ecological sense. Rational use of energy enables Cumerio to counter the impact of increasing prices and allows to minimize the direct and indirect influence of Cumerio’s activities on the environment.

Continuously striving for energy efficiency Cumerio is dedicated to improving the efficiency of its energy use at all levels. From a technical standpoint, the company has incorporated specific projects to create more energy efficient installations, to choose an optimal energy driver for its processes, and to regularly monitor and report on the energy use in all of its activities.

The increased intake of copper scrap also helps Cumerio reduce its energy use. The recycling process is far less energy intensive than refining copper concentrates.

In addition, Cumerio is dedicated to changing the traditional energy use mindset throughout the group. The company relentlessly encourages its employees to fully integrate energy efficiency into their daily routines, both on and off the job.

Cumerio has put an energy control programme into effect to continuously improve its energy performance. The company constantly monitors the energy efficiency of all of its industrial processes and regularly reports its findings.

New waste heat boiler saves energy In the summer of 2006, Cumerio installed in Belgium a new boiler system that will vastly improve the plant’s environmental performance.

The new boiler will reduce the energy intensive production of steam. The system will cover about one third of the average demand for steam within the plant through recuperation of waste heat in flue gases.

The new boiler will also reduce the load on the flue gas filters since it already collects a substantial portion of the coarse flue gas dust. This reduces the total

New waste heat boiler in Olen, Belgium

amount of dust laden flue gas through the filters. This in turn will enhance the performance of the filters in collecting fine flue gas dust.

Increased production and improved energy efficiency Since 2003, Cumerio Belgium in Olen has improved its energy efficiency by approximately 7%: - Energy efficiency of the electrolytic refinery has improved by 8% - By focusing on the cathodes loading system, energy efficiency of wire rod production has improved by approximately 13%.

IPPC directive The Integrated Pollution Prevention and Control directive (IPPC) stimulates organizations to adopt Best Available Technology (BAT). Cumerio is committed to following these guidelines. In 2006, the company continued to direct its investments in that regard.

Cumerio in Bulgaria, a trendsetter in IPPC permitting

26

Europe negotiated strict environmental norms when accepting Bulgaria for entry into the European Union. Cumerio was one of the first companies in Bulgaria to obtain an IPPC permit. This achievement recognizes that the company’s local operating conditions for the copper smelter comply with the strictest industrial requirements and guarantees the sustainability of its industrial processes. The IPPC permit enables Cumerio’s Bulgarian plant to operate under transitional emission norms until the end of October 2007.

Lorem

Continued investments for the environment During 2006, Cumerio has continued its â‚Ź30 million investment programme to adhere to the IPPC-based regulation in Bulgaria. In the third quarter of 2006, Cumerio started foundation works for a new scrubber and bag house filter in Pirdop to control and reduce emissions. The investments are evolving according to plan. Consequently, Cumerio is confident that it will be able to bring the new infrastructure online by mid 2007, and offer full compliance with the new standards by end October 2007.

The IPPC permit in Belgium In Belgium, Cumerio has initiated studies for renewal of its permit in 2009. The company continuously improves its processes and its environmental performance is fully compliant with current industry norms.

Reach, The copper industry is fully prepared for registration of chemicals The European Union enacted the new REACH legislation in 2006 to better monitor chemical products. The directive will be gradually implemented over the next decade. Cumerio has proactively taken the necessary steps to ensure compliance with the directive.

Cumerio, ready for REACH Cumerio and the copper industry have proactively prepared for the REACH legislation. The European Copper Institute, representing the copper industry, conducted a Voluntary Risk Assessment in preparation for REACH. Thanks to this initiative, Cumerio already has all the information and scientific data necessary to register the various substances it uses and imports.

REACH for safer chemicals

substances since it replaces forty legislative instruments.

REACH is a new regulatory framework commissioned by the European Commission to Register, Evaluate, Authorize, and restrict CHemicals (REACH). This new legislation brings more clarity to the manufacturing, marketing, import, and use of chemical

The goal of the new legislation is to increase knowledge about chemical substances and enhance safety. It will also spur innovation since it encourages substitution of highly dangerous substances with safer ones.

Human resources Cumerio constantly strives for an open and honest dialogue with its employees and their representatives. By investing in our employees we seek to optimize our human potential for future growth.

facts and figures On 31 December 2006, Cumerio employed 1,453 individuals, compared to 1,513 employees in 2005.

The number of employees remained fairly stable in Belgium and Italy. In Bulgaria, 117 employees joined a voluntary leave programme in the first half of the year.

The past year, Cumerio acquired Swiss Advanced Materials (SAM). Its 29 employees are also accounted for in the total headcount for 2006.

New European Works Council enhances mutual communication and the group’s overall functioning In anticipation of Bulgaria’s accession to the European Union, Cumerio and its labour unions agreed upon the installation of a European Works Council (EWC). This initiative will help forge an overall group identity.

It also offers a new communication channel in which all Cumerio plants can confer from a uniform European perspective. In addition, the EWC is beneficial to the company, its labour unions, and its employees: • By giving labour unions a better – and more European – view on what the group stands for • Through enhancing the communication between management, unions, and employees on all group matters affecting the Cumerio employee.

The first official seating will take place on 16 March 2007.

Manpower on 31.12.2006 by location 2002

559

2003

535

1022 965

2004

494

939

2005

502

910

2006

526

00

æ Belgium æ Bulgaria æ Italy æ Switzerland

122 122 120

101

798 100 29

500 500

11000 000

11500 500

22000 000

by gender Bulgaria

604

Belgium

194

484 42

Italy

95 5

æ Male æ Female

Switzerland 25 4

0

100 100

200 200

300 300

400 400

500 500

600 600

by category æ Managers æ White collars æ Blue collars

120

362

971

700 700

800 800

Timely renewal of collective labour agreements Cumerio values an open and honest dialogue with each of its labour unions. This approach has led to a timely renewal of all open collective labour agreements, both in Belgium and in Bulgaria.

Optimizing the human resources potential

28

The past year, Cumerio took a number of decisions to further optimize its organization and maximize the use of its existing human resources potential: • Existing employees get priority for new positions or promotions • Cumerio’s matrix-based organization and the stimulation of crossfunctional teams create learning opportunities for all employees involved • Installing development assessments followed by an individualized action plan to prepare managers for future growth opportunities.

Lorem

Furthermore in 2006, Cumerio reinforced its organization by hiring a number of external senior managers for key management positions.

Consultation meeting with the Olen mayor.

Cumerio in the community Cumerio realizes that the nature of its activities can have an impact on the surrounding communities and may lead to some concern.

The company has strengthened mutual understanding through regular communication and consultation with local communities. Cumerio also directly contributes to the local community.

The company focuses its sponsoring budget primarily on projects that benefit the municipalities surrounding its Bulgarian plant in Pirdop.

Intensive consultation and communication In Belgium, Cumerio’s relationship with the community emphasizes consultation and communication. For instance, Cumerio publishes and distributes a magazine designed to create understanding of Cumerio’s activities within the local Olen community. In September 2006, the company distributed 5,000 copies of its first edition of Rondom Cumerio magazine in the direct vicinity of the plant.

Furthermore, Cumerio meets on a regular basis with the local authorities of the communities that surround its major plants.

Focus on the Bulgarian communities Cumerio decided to focus its community sponsoring programme towards Bulgaria. The past year, Cumerio invested €130,000 in multiple projects for the municipalities of Pirdop and Zlatitsa. Among other things, the company contributed to the improvement of local roads, invested in new equipment and infrastructure for local schools and hospitals, and sponsored integration programmes for minority groups.

Safety Safety is very important for a company that deals with metallurgical processes. Consequently, Cumerio leaves nothing to chance when it comes to safety. From emergency plans to on-site traffic safety and close collaboration with municipal fire departments – Cumerio again initiated several safety action plans throughout 2006.

Regular training of on-site intervention units Cumerio’s site in Olen is a so-called Seveso company as it uses specific hazardous substances in certain minimal quantities. For this reason, the company has elaborated an internal and external emergency plan.

Cumerio organizes periodical training exercises for its own intervention unit. Once every two years, the company schedules a large-scale safety exercise with internal as well as external intervention units.

In 2006, the biannual Seveso exercise simulated the release of a toxic gas in the electrolysis installation.

The aim was to train the Cumerio intervention unit in the evacuation of victims from the stricken building. In addition, the team also had to sweep this vast building in cooperation with the municipal fire department. In combination with the weekly training sessions, such Seveso drills ensure that intervention units stay alert and can carry out their responsibilities effectively.

Ensuring safe working conditions Cumerio continuously assesses the working conditions in all of its plants.

The past year, Cumerio improved the safe operation of its wire rod production unit in Olen. The company installed a completely new elevator system that enables employees to safely enter, inspect, and maintain the installation’s melting furnace.

Fine-tuning of the on-site traffic plan Cumerio’s plant in Olen, Belgium, produces a large amount of copper cathodes and products. This causes for a huge amount of loading and unloading, which in turn leads to a dense traffic of trucks. To ensure safe operation for all its employees, the company has elaborated an on-site traffic safety plan. In 2006, Cumerio finalized the third phase of the plan: • All team leaders received training on the correct reaction to traffic offences and on the execution of safety interventions •R enewal of the on-site outlines for roads and operation areas with multiple heavy work traffic • Improvement of lighting, signalling, and outlining of pedestrian traffic.

Health Cumerio is committed to the health of its employees. Therefore, the company organizes regular medical checks on all sites, sets out action plans, and invests in training, protective garment, and specialized equipment to guarantee healthy working conditions. A short view on some of the examples from Cumerio’s many action plans.

Thorough monitoring of the working conditions on all sites 30

In 2006, Cumerio’s medical department in Bulgaria continued its annual health programme in Pirdop.

In concrete terms, the company monitored working condition parameters and executed a new health risk assessment in all production departments. For instance, the SO2 levels and exposure to heavy metals was screened at all workplaces in the various production departments.

The measurements did not detect any individual exposure above the prevailing norms, with the exception of very specific cases in the smelter and acid plant.

Lorem

Cumerio Belgium in Olen, also closely monitors working conditions, especially in its pyro-refining process.

In this context, the company regularly measures the exposure to lead and arsenic on the work floor.

Extended individual biomonitoring of all employees

Protecting employees against excessive noise

In addition to exposure measurements, Cumerio also runs in Bulgaria an extended individual bio-monitoring programme: • The local health department individually monitors the levels of lead in blood and arsenic in urine and follows up the results on a monthly basis with all production units.

• Personnel’s blood is checked for sugar and cholesterol levels • All employees undergo a biannual X-ray lung screening plus an ECG

Cumerio also focuses on reducing the noise levels in its production facilities. During the past year, the company’s medical department finalized its noise monitoring programme for all workplaces in the production and maintenance departments in Pirdop, Bulgaria. The installation of a new gas blower and the replacement of the pump units for the drying tower in the acid plant realized a significant noise reduction in the most critical areas. In addition, Cumerio’s medical department defined the protective equipment required for each workplace and put in place strict controls ensuring the proper use of this equipment.

Twice a year, the company organizes a Management Review on Well-being.

On this occasion, the group results of the bio-monitoring programme are presented and discussed. Based on this information, the meeting sets out new action plans in order to continue improving the working environment.

Investing in healthier workplaces Blood tests for detecting the presence of heavy metals have already revealed the positive impact of recent investments. Cumerio, for instance, has put a new diesel preheater into operation in the acid plant in Pirdop, Bulgaria. This investment significantly reduced the level of SO2 emissions in this particular area of the smelter.

Also, a new evaporative cooler was installed in the converter section.

This resulted in a further reduction of dust emissions and also lowered dust levels in the ventilation gases emitted through the stack.

In addition, the company invested in high-class personal protection equipment and installed a control programme on the use of the equipment.

All employees were also extensively informed about the risks associated with potential exposure, resulting from not wearing the protective garment.

Cumerio looks after the health of its personnel in Bulgaria Cumerio is a socially responsible employer. The company’s efforts in detecting breast cancer, a significant social disease, illustrate this. All female workers above the age of forty undergo a mammography. In addition, the medical department at Cumerio provides all women in the PirdopZlatitsa region in Bulgaria with the opportunity to participate in this programme.The company’s medical department finances the costs of bringing a mobile laboratory to Pirdop.

Innovation and Development

Expanding its innovative focus

Cumerio believes that in the long run, innovation and entering new niche markets will ensure profitability and sustainable development. In the past year, the company took various important steps to secure growth in the market of high added-value copper products.

Cumerio aims at further expansion of its technology base and its offer of new copper-based applications and products. This will help to develop its business in a sustainable way.

Building a strong position in high added-value products Since its inception, Cumerio has invested heavily in developing its specialty rod business.

During the past year, the company has worked on several projects in close collaboration with research centres and universities. Special emphasis has been placed on refractory materials and advanced production technologies.

With the acquisition of a majority stake in Swiss Advanced Materials (SAM), Cumerio has secured a strong position in the specialty rod applications market. SAM is specialized in the production of complex profiles that are commonly used in the electrical industry. Its team will bring important expertise to the Cumerio group which will enable it to realize a substantial growth in previously untapped niche markets.

Cumerio and its environmental performance indicators

Safety

Olen 2005

2006

Pirdop 2005

2006

Avellino 2005

Frequency Rate # accidents/million

working hours 14.6 14 5.5 5.06 11 Severity Rate lost days/1 000

working hours 0.72 0.43 0.27 0.25 0.16

Environment Materials Used tonnes 396 216 395 313 936 793 887 943 139 800 % secondary % 21.1 20.3 2.9 4.3 1.3

Waste produced tonnes 4 048 5 213 47 876 25 108 341 % waste recovery % 21.9 24.5 3.0 16.3 80.1 Fayalite Flotation Sand produced tonnes - - 573 274 438 627 -

Water Consumption 1 000 m3 754 738 6 660 5 640 98.3 Energy Consumption gigajoules 1 576 035 1 554 019 1 412 742 1 349 728 285 306

Metals emitted to Water kg 2 190 2 197 2 710 1 967 85 Metals emitted to Air kg 1 475 1 130 34 814 54 704* 6,4 SOX emission tonnes 48 8.7 3 414 4 084* 0.08 NOX emission tonnes 99 161.5* 29.8 27.1 21.5

Compliance excess rate % 0.30 0.39 9.5 3.8 5 Number of complaints on hindrance number 9 8 0 5* 0 *

Figures 2006 are based on newly installed equipment enabling a more accurate monitoring

2006 18 0.56

152 130 1.6 337 75 87.9 307 045 66 7.2 0.08 21.8 5 0

32

Investor relations

Proactive and transparent communication recognized From the start, proactive and transparent communication has been a key priority for Cumerio. During the year, the company has pursued its communication efforts with both analysts and institutional and private shareholders. As a recognition, the company has received two awards.

Cumerio is committed to ensuring a continuous information flow to analysts and investors. During the past year, the company has undertaken various road shows throughout Europe, the United States, and Canada to meet with institutional investors.

Cumerio has also attended a number of conferences and fairs for retail investors in Belgium. Additionally, the company has upgraded its Web site to improve access to information about Cumerio and the markets in which it operates.

Those extensive communication efforts have been well received and widely appreciated: • In March, Cumerio received the award for ’Best communication in the mid-cap segment’ from Cash, a Belgian financial magazine • In November, the company was awarded ’Best Investor Relations’ by the Belgian Association of Financial Analysts ABAF/BVFA.

Share price up by 18% For most commodity market players, 2006 has been a volatile year.

Cumerio was no different. During the first five months, the share price peaked at approximately €23. Afterwards, the price came down to its 2005 year-end level. This evolution reflected some profit taking, after a very good run since Cumerio was first listed, and a somewhat negative

bias towards commodities. The last quarter was marked by an upward move with the stock closing the year at €18.20, a 18.49% increase compared to the end of 2005.

The Cumerio share is part of several domestic and international indices.

In comparison with these indices, the Cumerio share has shown a mixed performance throughout the year.

The share slightly outperformed the Euronext Brussels’ Eurolist Bel Mid

Index, but it underperformed the Dow Jones Stoxx TMI Small Index and the Dow Jones Stoxx TMI Basic Resources Index by approximately 10%. This latter performance reflects the significant mining component of the index.

Relative share performance 150

125

100

75

30/12/05

03/03/06

09/05/06

07/07/06

21/08/06

æ Cumerio Share æ Cumerio vs Bel Mid Index æ Cumerio vs DJ Stoxx TMI Small Index æ Cumerio vs DJ Stoxx TMI Basic Resources Index

Cumerio present at VfB’s retail investors fair in Antwerp, Belgium

29/12/06

Good liquidity reflects a 100% free float In terms of liquidity, volumes remained high for a mid-cap company. In 2006, daily volumes averaged about 170,000 shares, representing a turnover of approximately €3 million.This performance ranks Cumerio among the top twenty on Euronext Brussels in terms of velocity and among the top three of Belgian mid-cap companies.

34

Cumerio has a 100% free float. The one-year lock-up of shares owned by Umicore and Parfimmo expired in 2006. At the time of the de-merger, both companies had agreed not to sell their shares for a period of twelve months from the listing date.

Lorem

ESTIMATED SHAREHOLDER BASE 2006 15% 4%

International shareholder base Cumerio’s shareholder base remains very international. Although there is still a large part of domestic retail and institutional shareholders, a major portion of today’s shareholders reside in the United Kingdom and North America. The rest of the shareholder base is situated in other European countries.

An attractive dividend policy In February 2006, Cumerio further specified the dividend policy that it intends to pursue in the coming years. The company targets an average pay-out ratio of 40 to 50% over the copper cycle, aiming at more stability than what is typical for cyclical stocks. In accordance with this policy, the 2005 gross dividend has increased compared to the previous year to €0.60 per share, corresponding to a dividend payout of 36%.

35%

8%

13% 25%

æUK æBelgium æUS/Canada æFrance æGermany æOthers

Financial Calendar 2007 26 April General Shareholders Meeting Extraordinary Shareholders Meeting 26 April Quarterly update 22 August 2007 half-year results End October - early November Quarterly update Retail investors’ visit to Olen

The Board of Directors proposed a gross dividend of €0.70 per share for 2006, a 17% increase compared to the year before.

Treasury shares and stock option plans Cumerio launched a new stock option plan in 2006. Members of the Executive Committee and other senior executives received a total of 183,000 options giving them the right to buy existing or new shares over a period of seven years at an exercise price of €18.24 per share.

Also taking into account the 2005 stock option plan, a total amount of 465,500 stock options have been granted. During the year, 38,500 options from the 2005 plan have been exercised.

On 27 April 2006, the Extraordinary Shareholders Meeting granted the company the right to buy back up to 10% of the outstanding number of shares. During the year, the company bought 282,500 shares at an average price of €17.60 per share, to finance the 2005 stock option plan. At the close of the year, Cumerio held a total of 244,000 shares, recorded as treasury shares, reflecting those options which have already been exercised.

Increasing analyst coverage During the year, Cumerio’s coverage by analysts almost doubled compared to 2005. The company continues its efforts to further ex-

pand its coverage by analysts in 2007.

Cumerio is dedicated to helping analysts increase their understanding of the sector and of Cumerio’s activities. This is mostly done during its regular contacts or meetings.

In May 2006, the company organ-

Bank Degroof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brussels, Belgium Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . London, United Kingdom Dawnay, Day Lockhart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . London, United Kingdom Exane BNP Paribas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paris, France Fortis Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brussels, Belgium HSBC* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dusseldorf, Germany ING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brussels, Belgium KBC Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brussels, Belgium Kepler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amsterdam, the Netherlands Petercam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brussels, Belgium UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . London, United Kingdom *

ized a field trip to the Pirdop site in Bulgaria, which was attended by a number of analysts and investors.

The programme consisted of presentations by members of the Executive Committee and a visit to the local smelter and refining facilities.

On 31 December 2006, the following institutions carried out equity

started coverage with 2006 annual results publication

KEY SHARE DATA

2005

2006

Share price (€/share) High Low Close Average

15.51 10.30 15.36 13.75

22.88 14.26 18.20 17.82

178 299

168 418

0.60

0.70*

25 702 075 5 208 963

25 702 075 5 208 963

6.76 3.01 3.57

6.76 3.01 3.57

Average daily trading volume (q) Gross dividend (€/share) Total number of outstanding shares Total number of VVPR strips Shareholder base at 31/12/06 (%)(1): Lansdowne Partners (UK)(4 May 2005) East Side Capital L.P. (jointly with Margate Capital L.P.)(US)(12 May 2005) Schroders Investment Management (UK)(29 September 2005)

Cumerio (treasury shares) -

Free float 95 Based on official declarations to Euronext (date of declaration between brackets) Dividend proposed to the General Assembly of 26 April 2007.

(1) *

0.95 100

36

Executive Committee

Luc Delagaye Chief Executive Officer

Michel Moser Chief Financial Officer

Patricio Barrios Vice-President Operations

Luc Delagaye holds an MSc Degree in Mechanical Electrotechnical Engineering from the University of Ghent.

In 1984 he joined Bekaert, a leading Belgian steel wire company. He left for Chile in 1985 where he worked for more than seven years as Manager Operations of Bekaert’s joint venture. He joined Umicore Copper at the end of 1996. In January 2004 he became Umicore Copper business unit manager.

Michel Moser holds a Commercial Engineering Degree from the University of Brussels (Ecole de Commerce Solvay) and a post graduate degree in International Trade. He joined Société Générale des Minerais in 1983 and has held positions in Brussels, New York, and Hong Kong.

He managed the Sogemin Metals brokerage in London between 1995 and 2000.

Patricio Barrios assumed the responsibility of Vice-President Operations as of 1 April 2006. He holds a PhD in Chemistry and an MBA from ESADE in Barcelona (Spain). He has more than 30 years of experience within the copper industry.

He is Vice-Chairman of the European Copper Institute and Board member of the International Copper Association, and of Non Ferrous International.

With the de-merger from Umicore, he was appointed Chief Executive Officer and Director of Cumerio on 28 April 2005.

Early 2000, he joined Umicore as Vice-President Corporate Development and Investors Relations and was appointed to the Umicore Executive Committee in May 2003.

With the de-merger from Umicore, he became Chief Financial Officer and Director of Cumerio on 28 April 2005.

He began his career with Rio Tinto Patiño, then Rio Tinto Minera, where he became Vice-President Metallurgy and member of the Executive Board of Management in 1993. In 1996 he was appointed Senior Vice-President Operations of Atlantic Copper, the Spanish subsidiary of the US company Freeport-McMoRan Copper & Gold.

In 2004 he left Atlantic Copper and continued his career as an independent consultant.

Stefan Boel Vice-President Copper Refining

Leo Depestele Vice-President Human Resources

Stefan Boel holds a PhD in Chemistry from the University of Antwerp.

He joined the Aralco group (aluminium building products) in 1993 and held several successive positions in Production, Projects, and Sales.

Leo Depestele joined Metallurgie Hoboken Overpelt, in 1982. Based in Hoboken he worked for the Human Resources Department as Project and Payroll Manager. Following the merger between Metallurgie Hoboken Overpelt, Vieille Montagne, and Union Minière he held several Human Resources positions, including Compensation and Benefits Manager for Belgium and later for the Umicore Group.

He joined Umicore Copper in 2001 as Application and Marketing Manager. He became Commercial Manager and subsequently Commercial Director responsible for the commercial activities of Umicore’s copper smelting and refining activities in Bulgaria (Umicore Med).

Thierry Centner Vice-President Copper Products Thierry Centner was a consultant for Sorca in North Africa before joining Société Générale des Minerais in 1976 as Commercial Manager for Lead and Special Metals. He headed the department for Cobalt, Chemicals, and Special Metals before moving to Metallurgie Hoboken Overpelt as Commercial Manager for Copper, Lead, and Precious Metals.

In 1990, he became Commercial Director of the Copper Division of Union Minière, thereafter Umicore Copper. He is also Chairman of the International Wrought Copper Council (IWCC).

1

2

3

In 2004 he was appointed HR Director responsible for Belgian sites as well as for Northern Europe.

Philippe Gothier Vice-President Legal Philippe Gothier holds a Law Degree from the University of Liège.

He started his career in the legal and tax department of the Société des Mines et Fonderies de Zinc de la Vieille Montagne.

After holding various management positions in this company and in its subsidiaries, he joined Umicore’s legal department in 1992 in the capacity of Deputy General Counsel.

4

5

6

7 1. Leo Depestele 2. Philippe Gothier 3. Michel Moser 4. Luc Delagaye 5. Patricio Barrios 6. Thierry Centner 7. Stefan Boel

38

Board of Directors

Karel Vinck Chairman

Etienne Davignon Vice-Chairman

Independent, Non-Executive Director

Independent, Non-Executive Director

Karel Vinck has been Chief Executive Officer of Eternit, Bekaert, and Umicore and was chairman of the Executive Committee of S.N.C.B./ N.M.B.S. until early 2005. He is chairman of the Board of Directors of Umicore and a Board member of Suez-Tractebel, Tessenderlo Group, Eurostar, the Catholic University of Leuven, and the Théâtre Royal de la Monnaie. He is Honorary Chairman of VOKA, the Flemish employers association, and Chairman of the Flemish Science Policy Council. He is coordinator of the European Rail Traffic Management System (ERTMS) with the European Commission.

From 1962 to 1977, Etienne Davignon was Head of the Cabinet of the Belgian Ministry of Foreign Affairs and, from 1969 to 1977, he was responsible for the Political Department of that Ministry. In 1977, he was appointed Vice-President of the European Commission, in charge of industry, research, and energy until the end of 1984. In 1985, he joined Société Générale de Belgique, today integrated in the Suez Group, and was the company’s Executive Chairman until 2001.

Karel Vinck heads the Board of Directors as well as the Nomination and Remuneration Committee. His current period in office expires at the 2008 Ordinary General Meeting.

Etienne Davignon is a Member of the Board of Suez, Sofina, Real Software, Accor (France) and Gilead (USA); Vice-Chairman of the Board of SuezTractebel and Chairman of SN AirHolding, Recticel, and CMB.

He is a member of the Audit Committee and Nomination and Remuneration Committee. His current period in office expires at the 2007 Ordinary General Meeting.

Luc Delagaye Chief Executive Officer, Executive Director Please refer to the Executive Committee for a detailed resume.

Luc Delagaye has been appointed as Chief Executive Officer of Cumerio since the de-merger in April 2005. His current period in office expires at the 2008 Ordinary General Meeting.

Philippe Delaunois Independent, Non-Executive Director Philippe Delaunois worked in the Belgian steel industry for most of his career and was Managing Director of the Cockerill Sambre group until 1999. He is currently Chairman of the Board of Mediabel and CFE. He is a member of the Board of the ING group, Mobistar, Corelio, DEME, Shanks plc, and Suez Energy Services.

Michel Moser

Remi Vermeiren

Chief Financial Officer, Executive Director

Independent, Non-Executive Director

Please refer to the Executive Committee for a detailed resume.

Remi Vermeiren was CEO of Kredietbank, which became KBC Bank and Insurance Holding (KBC) after the merger with Cera Bank and ABB Insurance. He led, among others, the penetration of KBC into Central Europe and retired in 2003.

Michel Moser became the Chief Financial Officer of Cumerio upon the de-merger in April 2005. His current period in office expires at the 2008 Ordinary General Meeting.

He is a member of the Board of Directors of Devgen, a Belgian listed biotech company as well as of a number of private Belgian companies and non-profit organizations.

Thomas Leysen Independent, Non-Executive Director

He is a member of the Audit Committee and Nomination and Remuneration Committee. His current period in office expires at the 2007 Ordinary General Meeting.

Independent, Non-Executive Director

Thomas Leysen holds a Law Degree from the University of Leuven (Belgium). He joined Umicore in 1993 as member of the Executive Committee and became Chief Executive Officer in May 2000. In this context, he has been the driving force in the creation of Cumerio.

Etienne Denis holds a PhD in Science from the University of Louvain (UCL). After working at the University and with Gécamines in Congo he joined Umicore in 1974 where he held numerous management positions until 2003.

Thereafter, he became a Board Member at Umicore until mid 2005, the date on which he switched to Cumerio’s Board.

He is a Board member of Atlas Copco (Sweden), the Leuven-based micro-electronics research centre IMEC (Belgium), and the supervisory Board of the Bank Metzler (Germany). Furthermore, he is Chairman of the Board of Corelio, Belgium’s leading newspaper publishing company, and a member of the Executive Committee of the Belgian Employers Federation, VBO/FEB.

His current period in office expires at the 2007 Ordinary General Meeting.

His current period in office expires at the 2010 Ordinary General Meeting.

Etienne Denis

3 1

4

5 6

2

He is Chairman of the Audit Committee. His current period in office expires at the 2008 Ordinary General Meeting.

8 7

1. Michel Moser 2. Etienne Denis 3. Thomas Leysen 4. Karel Vinck 5. Luc Delagaye 6. Remi Vermeiren 7. Etienne Davignon 8. Philippe Delaunois

40

Financial Review

strong earnings Recurring operating results rose in 2006 to €93.8 million, mainly resulting from a strong performance of the Copper Refining unit. Favourable external market conditions combined with good production figures are the main reason for these results.

The profitability for its Copper Products division also improved in the second half, due to a sustained demand and receipt of an additional contribution from customers, justified by the impact of higher copper

prices. Net recurring earnings, group share, totalled €70.4 million, up from €48.1 million in 2005, representing an adjusted earnings per share of €2.75.

Cash flow and debt In 2006, Cumerio generated a strong operating cash flow before net working capital requirements, at €125.8 million.

ditional means to finance future organic and external growth opportunities. Part of the interests have been swapped into floating, with a view to achieving some balance between fixed and floating interest rates.

Net working capital requirements were impacted during the year by the much higher metal prices and the increased deliveries of copper products. Compared to June, a proactive management and somewhat lower copper prices enabled Cumerio to reduce working capital requirements at the end of the year.

Financial results and taxation

Capital expenditures for the period amounted to €48.5 million, with a larger portion during the second half of 2006. Key non-maintenance items included the new investment programme and the IPPC related investments in Pirdop, Bulgaria.

Both total tax charges for the year and recurring tax charges amounted to €10.3 million. This corresponds to an effective tax rate of approximately 12.8% on recurring pre-tax earnings. Recurring current taxes for the period amounted to €8.3 million, or 10.3% of the recurring pre-tax consolidated profit. In addition to the favourable tax situation in Bulgaria, the introduction of notional interest in Belgium at the beginning of the year has also had a positive effect on the group’s consolidated tax charge.

Cumerio’s net financial debt increased from €62.8 million to €131.9 million, down from €171.1 million at the end of June. This represents a gearing ratio - net debt / (net debt + equity) - of approximately 25%.

In July, Cumerio issued 7-year notes for an amount of €125 million in the form of a public offering in Belgium. The notes have a coupon of 4.875%.The funds have been used to consolidate the net working capital requirements and will provide ad-

Recurring financial charges for the year amounted to €13.4 million.

Net interest charges for the period totalled €14.1 million, reflecting the impact of the increased financial debt and rising interest rates.

Non-recurring items and IAS 39 effect In 2006, Cumerio has booked nonrecurring results of €1.6 million after tax. The non-recurring items include

a write-back on inventories and expenses relating to a voluntary redundancy plan in Bulgaria.

The application of IAS 39 in respect of transactional hedges resulted in a positive impact of €0.5 million after tax for the year. As announced previously, the strict application of this standard creates some noncash P&L volatility that Cumerio has decided to exclude from recurring operating, financial and tax results, with a view to improving the readability and comparability of the financial statements.

Hedging Cumerio’s effective dollar rate for 2006 was approximately €/US$1.2350.

During the year, Cumerio has started to hedge part of its anticipated structural dollar exposure for 2007. At 21 February 2007, approximately 60% of the group’s structural dollar exposure for 2007 has been hedged at about €/US$1.3050.

Cumerio has also taken advantage from the high prevailing metal prices to hedge 70% of its exposure to copper and precious metals for 2007.

Similarly, half the exposure to metal prices for the years 2008 and 2009 has also been hedged. The related income streams have been hedged into euros.

International Financial Reporting Standards In line with IFRS standards, Cumerio has implemented IAS 19, Employee Benefits, retroactively with effect from 1 January 2005. In accordance with this standard, Cumerio has elected to recognize actuarial gains and losses in equity.

42

Glossary Financial Definitions

EBIT Operating profit (loss) of fully consolidated companies.

NON-RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

EPS ADJUSTED BASIC

Recurring EBIT / average capital employed where EBIT is adjusted for certain financial items such as securitization costs.

Net recurring earnings, Group share/ (average number of outstanding shares - treasury shares).

Includes non-recurring items related to restructuring measures, impairment of assets, and other income or expenses arising from events or transactions that are clearly distinct from the ordinary activities of the company. Metal inventory writedowns and write-backs are part of the non-recurring EBIT of the business units.

CAPITAL EMPLOYED

IAS 39 EFFECT

Investments in tangible and intangible assets.

Non-cash timing differences in revenue recognition due to the non-application of hedge accounting to transactional hedges, which means that hedged items can no longer be measured at fair value.

RECURRING EBIT EBIT - non-recurring EBIT - IAS 39 effect.

Shareholders equity excluding fair value reserves and currency translation adjustments + net interest-bearing debt including provisions for employee benefits.

CAPITAL EXPENDITURE

CASH FLOW BEFORE FINANCING Net cash generated by (used in) operating activities + net cash generated by (used in) investing activities.

NET FINANCIAL DEBT

RECURRING EBIT MARGIN

Non-current financial debt + current financial debt - cash and cash equivalents

Recurring EBIT/ revenues (excluding metals).

EPS DECLARED BASIC

EBITDA

Net earnings, Group share / (average number of outstanding shares - treasury shares).

EBIT + depreciation and amortization + non-cash expenses other than depreciation, (i.e., increase and reversal of provisions, changes in inventory valuation, IAS 39 effect and impairment results) of fully consolidated companies.

REVENUE EXCLUDING METALS All revenue elements - value of purchased metals.

EPS DECLARED DILUTED Net earnings, Group share / (average number of outstanding shares - treasury shares + (number of potential new shares to be issued under the existing stock option plans x dilution impact of the stock option plans)).

EPS ADJUSTED DILUTED Net recurring earnings, Group share/ (average number of outstanding shares - treasury shares + (number of potential new shares to be issued under the existing stock option plans x dilution impact of the stock option plans)).

VVPR STRIPS In Belgium, each VVPR strip, presented together with the ordinary coupon of the same number, gives the holder the right to a reduced rate of withholding tax. This currently amounts to a reduction from 25 to 15%. The period of presentation has now been extended to 3 years starting on 1 January of the year during which the dividend is paid.The VVPR strips are listed on Eurolist by Euronext Brussels.

44

Cumerio Group / Financial statements

Contents Consolidated income statement Consolidated balance sheet Consolidated cash flow statement Consolidated statement of income and expenses recognized in equity Notes to the consolidated financial statements Parent company separate summarized financial statements Report of the statutory auditor on the consolidated financial statements at 31 December 2006

46 47 48 49 50 82 84

Consolidated income statement Consolidated balance sheet Consolidated cash flow statement Consolidated statement of income and expenses recognized in equity Notes to the consolidated financial statements 1.

Basis of preparation

2.

Accounting policies

3.

Impact of the amended IAS 19 standard on the financial statements

4.

Financial risk management

5.

Critical accounting estimates and judgements

6.

Group companies

7.

Foreign currency measurement

8.

Segment information

9.

Business combinations

10. Operating income 11. Other operating expenses 12. Non-recurring results and impact of IAS 39 included in operating results 13. Payroll and related benefits 14. Net finance cost 15. Income taxes 16. Intangible assets 17. Property, plant, and equipment 18. Financial assets 19. Inventories 20. Trade and other receivables 21. Deferred tax assets and liabilities 22. Cash and cash equivalents 23. Consolidated statement of changes in shareholder’s equity 24. Share capital 25. Financial debts 26. Trade and other payables 27. Provisions for employee benefits 28. Provisions for other liabilities and charges 28. Notes to the cash flow statement 30. Financial instruments 31. Off-balance sheet rights and commitments 32. Contingencies 33. Related party transactions 34. Earnings per share 35. IFRS developments Parent company separate summarized financial statements Report of the statutory auditor on the consolidated financial statements at 31 December 2006

Consolidated income statement (â‚Ź thousand)

Notes

2006

2005

Revenues

3 395 325

1 965 608

Other operating income

27 857

11 721

10

3 423 182

1 977 329

3 179 953

1 756 217

Operating income Raw materials and consumables used

13

51 719

50 063

Depreciation and impairment result

36 180

39 182

Increase (decrease) in provisions

(4 254)

3 602

11

60 655

63 387

Operating expenses

3 324 253

1 912 451

RESULT FROM OPERATING ACTIVITIES

98 929

64 878

14

6 163

2 947

Financial expenses

14

(21 648)

(10 895)

Foreign exchange gains (losses)

14

(863)

884

82 581

57 814

(10 267)

(15 085)

GROUP PROFIT (LOSS) OF THE PERIOD

72 314

42 729

Of which group share

72 499

42 645

Of which minority interest

(185)

84

(â‚Ź)

Payroll and related benefits

Other operating expenses

Financial income

46

PROFIT (LOSS) BEFORE INCOME TAX Income taxes

15

Basic earnings per share

34

2.84

1.66

Diluted earnings per share

34

2.83

1.66

0.70

0.60

Proposed dividend per share

The comparables for 2005 are restated to reflect the retrospective application of IAS19 as amended.

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated balance sheet (€ thousand)

Notes

31/12/06

31/12/05

271 022

245 600

Intangible assets

16

2 734

2 621

Goodwill

16

4 947

Property, plant and equipment

17

246 469

Available-for-sale financial assets

18

20

20

Long term loans granted

18

13 710

13 763

Trade & other receivables

20

20

3 122

2 692

CURRENT ASSETS

672 993

526 351

Inventories

19

330 862

246 792

Trade & other receivables

20

271 795

187 810

Income tax receivables

21

413

582

Cash and cash equivalents

22

69 923

91 167

NON-CURRENT ASSETS

Deferred tax assets

21

226 484

TOTAL ASSETS

944 015

771 951

23

399 072

338 821

Share capital

181 220

181 220

Share premiums

31 282

31 282

Retained earnings

172 137

115 021

Fair value and other reserves

18 977

11 298

Treasury shares

(4 544)

GROUP SHAREHOLDERS’ EQUITY

MINORITY INTERESTS

345

399 641

339 166

GROUP EQUITY

569

23

146 868

88 263

Provisions for employee benefit

27

9 149

9 321

Financial debt

25

130 890

76 145

Trade debt & other payables

26

2 470

2 797

Deferred tax liabilities

21

3 563

NON-CURRENT LIABILITIES

Provisions for other liabilities & charges

CURRENT LIABILITIES

796 397 506

344 522

Financial debt

25

70 949

77 775

Trade debt & other payables

26

321 400

260 341

Income tax payable

21

5 157

1 356

Provisions for other liabilities & charges

28

5 050

944 015

771 951

TOTAL EQUITY & LIABILITIES The comparables for 2005 are restated to reflect the retrospective application of IAS19 as amended.

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated cash flow statement 2006

2005

Consolidated profit (loss) (Group share)

(â‚Ź thousand)

Notes

72 499

42 646

Minority interest in consolidated profit (loss)

(185)

84

Adjustments for non-cash transactions

29

31 403

42 121

Adjustments for items to disclose separately or under investing and financing cash flows

29

22 126

21 641

Change in working capital requirements

29

(102 492)

(3 863)

Cash flow generated from operations

23 351

102 629

Tax paid during the period

(4 260)

(4 661)

19 091

97 968

29

Net cash flow generated from operating activities

48

Acquisitions of property, plant, and equipment

(47 699)

(17 163)

Acquisitions of intangible assets

(850)

(102)

Acquisitions of new subsidiaries (net of cash acquired)

9

(1 583)

Acquisitions of financial assets

(19)

New loans extended

(1 864)

(3)

Subtotal acquisitions

(51 996)

(17 287)

369

2 306

Disposals of property, plant, and equipment

Repayment of loans

53

63

Subtotal disposals

422

2 369

(51 574)

(14 918) 22

Net cash flow generated from investing activities

Grants received

Treasury shares

(4 544)

Interest received

1 997

726

(11 536)

(8 204)

New loans

25

150 414

132 409

Repayment of loans

25

(109 890)

(211 072)

Dividends paid to Cumerio shareholders

(15 230)

(7 478)

Dividends paid to minority shareholders

(15)

Net cash flow generated from financing activities

11 196

(93 597)

(8)

3 739

Total net cash flow of the period

Interest paid

Effect of exchange rate fluctuations on cash held Net cash and cash equivalents at the beginning of the period Net cash and cash equivalents at the end of the period

(21 295)

(6 808)

91 137

97 945

22

69 842

91 137

The comparables for 2005 are restated to reflect the retrospective application of IAS19 as amended.

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated statement of income and expenses recognized in equity (â‚Ź thousand)

Notes

2006

2005

Changes in cash flow hedge reserves

8 920

(12 937)

Changes in post employment reserves

(775)

(2 266)

Changes in share based payments reserves

694

692

Changes in deferred taxes recognized in equity

(1 097)

3 863

Changes in currency translation differences

(13)

17 729

23

7 729

7 081

72 314

42 729

Total recognized income (expense)

of which minority share

of which group share

80 043 (171) 80 214

49 810 151 49 659

Net income (expense) recognized in equity Profit (loss) of the period

The comparables for 2005 are restated to reflect the retrospective application of IAS19 as amended.

The accompanying notes are an integral part of these consolidated financial statements.

Notes to the Consolidated Financial statements 1. Basis of preparation The Company’s consolidated financial statements for the year ending on 31 December 2006, which were authorized for issuance by the Board of Directors on 20 February 2007, and the annual Board report prepared in accordance with article 119 of the Belgian Company Law set forth on pages 1 to 44, have been prepared in accordance with the legal and regulatory requirements applicable to the consolidated financial statements of Belgian companies. They include those of the Company and of its subsidiaries.

50

Cumerio was established on 28 April 2005 by the de-merger of the copper activities of Umicore. For accounting and tax purposes, the de-merger took effect retroactively on 1 January 2005 and has been accounted for as a reverse acquisition.

Since 1 January 2005, the Group presents its annual consolidated financial statements in accordance with all International Financial Reporting Standards (IFRS)1 adopted by the European Union (EU).

In 2006, Cumerio for the first time implemented the amendments to IAS 19 ‘Employee Benefits’, more specifically the option to recognize actuarial gains and losses in equity. Comparative figures for 2005 have been restated accordingly.The impact of changes in accounting policies relevant for the opening balance sheet, at 1 January 2006 and for the comparable period of 2005 is disclosed in note 3 ‘Impact of the amended IAS19 on the financial statements’.

The consolidated financial statements are presented in thousands of euros, rounded to the nearest thousand, and have been prepared on a historical cost basis, except for those items valued at fair value.

New standards, amendments and interpretations that are mandatory for the accounting periods beginning on or after 1 January 2007 have not been early adopted by the Group.

2. ACCOUNTING POLICIES 2.1 PRINCIPLES OF CONSOLIDATION Cumerio applies full consolidation for its subsidiaries - entities in which the Company has control - i.e., the power to govern the financial and operating policies so as to obtain benefits from its activities. Control is presumed when Cumerio owns, directly or indirectly through subsidiaries, more than 50% of the voting rights.

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

Note 6 gives a listing of all subsidiaries of the Group at the closing date.

Acquisitions are accounted for according to the purchase method. The assets, liabilities and contingent liabilities of the acquired company are measured at their fair value at the date of acquisition. The cost of acquisition is measured as the fair value of assets given up, shares issued or liabilities assumed at the date of acquisition, plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the Group’s share in the fair value of the net assets of the subsidiary is recorded as goodwill (see chapter 2.7 on Intangible assets). If the Group’s share in the fair value of the subsidiary’s net assets exceeds the cost of acquisition, the excess is recognized immediately in the income statement.

Intra-group transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless a loss is an indication of impairment. Where necessary, the subsidiaries’ accounting policies have been changed to ensure consistency with the policies that the Cumerio Group has adopted.

An associate is an entity over the financial and operating policies of which the Company has a significant influence, but in which it has no control. Typically, this is evidenced by an ownership of between 20 and 50 per cent of the voting rights. A joint venture is a contractual arrangement whereby the company and other parties undertake, directly or indirectly, an economic activity that is subject to joint control.

Both associates and joint ventures are accounted for using the equity method. Under this method, the Group’s share of the post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves.

Unrealized gains on transactions between the Company and its associates or joint ventures are eliminated to the extent of the Company’s interest in the associates and

(1) As per the standards and interpretations published by the International Accounting Standards Board (IASB) and the IASB’s Standing Interpretation Committee (SIC), respectively.

joint ventures. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment.

The investments in associates and joint ventures include the goodwill on acquisitions.

The Company currently has no investments in associates or joint ventures.

2.2 SEGMENT REPORTING A business segment is a group of assets and operations engaged in providing products and/or services that are subject to risks and returns that are different from those of other business segments.

A geographical segment is engaged in providing products and/or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other environments.

The business segments are the primary segments of the Group. The geographical segments are its secondary segments.

2.5 FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are recognized in the functional currency of each entity at exchange rates prevailing at the date of the transaction. The date of a transaction is the date at which the transaction first qualifies for recognition. For practical reasons, a rate that approximates the actual rate at the date of the transaction is used in some cases, for example, an average rate for a week or month. Subsequently, monetary assets and liabilities denominated in foreign currencies are translated at the closing rate at the balance sheet date.

Gains and losses resulting from the settlement of foreign currency transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the income statement as financial result.

In order to hedge its exposure to certain foreign exchange risks, the Company has entered into certain forward and options contracts (see chapter 2.22 on Financial instruments).

2.6 PROPERTY, PLANT AND EQUIPMENT

2.3 INFLATION ACCOUNTING During the periods under review, none of the Group’s entities report in the currency of a hyperinflationary economy.

Property, plant and equipment are recorded at historical cost, less accumulated depreciation and impairment losses. Cost includes all direct costs and appropriate allocation of indirect costs incurred to bring the asset to working condition for its intended use.

2.4 FOREIGN CURRENCY TRANSLATION Functional currency: items included in financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity.The consolidated financial statements are presented in euros which is the functional currency of the parent.

To consolidate the Group and each of its subsidiaries, the financial statements are translated as follows: • A ssets and liabilities at the period-end rate as published by the European Central Bank • Income statements at the average exchange rate for the period • The components of shareholders’ equity at the historical exchange rate Exchange differences arising from the translation of the net investment in foreign subsidiaries at the period-end exchange rate are recorded as part of the shareholders’ equity under ‘Currency translation differences’.

Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as local currency assets and liabilities of the foreign entity and are translated at the closing rate.

There are no borrowing costs capitalized in the costs of the assets. All borrowing costs are recognized as expense in the period in which they are incurred.

The straight-line depreciation method is applied through the estimated useful life of the assets. Useful live is the period of time over which an asset is expected to be used by the company.

Repair and maintenance costs are expensed in the period in which they are incurred if they do not increase the future economic benefits of the asset. Otherwise, they are classified as separate components of items of property, plant and equipment.Those components are accounted for as separate assets as they have useful lives different from those items of property, plant and equipment to which they relate.

Typically, useful life per main type of property, plant and equipment is defined as follows: Land

Non-depreciable

Buildings - Industrial buildings

20 years

- Improvements to buildings

10 years

- Other buildings such as offices and laboratories

30 years

- Investment properties

30 years

Plant, machinery and equipment

10 years

- Furnaces

7 years

- Small equipment

5 years

Furniture and vehicles - Vehicles

5 years

- Mobile handling equipment

7 years

- Computer equipment

3 to 5 years

- Furniture and office equipment

52

The estimated useful life is assessed and explicitly validated in the investment request for all material newly acquired or constructed investments.

Assets are reviewed for an indication of impairment at each balance sheet date to assess whether they are recoverable in the form of future benefits. If the recoverable amount has decreased below the carrying 2.7 INTANGIBLE ASSETS

5 to 10 years amount, an impairment loss is recognized and accounted for as an operational charge. To assess impairments, assets are grouped in cash-generating units (CGU) (see chapter 2.13 on Impairment of non-financial assets). A cash-generating unit is the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent from the cash inflows from other assets or groups of assets.

2.7.1 Concessions, patents and licences Patents and licences are amortized over the period of their legal protection. Land use rights are amortized over the relevant contractual period using a straight-line method.

the processes prior to commercial production or use.

They are capitalized if, among others, the following conditions are met:

2.7.2 Software

• T he intangible asset will give rise to future economic benefits or, in other words, the market potential has been clearly demonstrated; • The expenditures related to the process or product can be clearly identified and reliably measured.

Software and related internal development costs are amortized over their estimated useful life, typically over a period of five years. The estimated useful life is assessed and explicitly validated in the investment request for all newly acquired material software and related development costs.

In circumstances where it is difficult to clearly distinguish between research and development costs, the costs are considered as being research. If development costs are capitalized, they are amortized using a straight-line method over the period of their expected benefits but not exceeding five years.

2.7.3 Research and development

2.7.4 Goodwill

Research costs related to the prospect of gaining new scientific or technological knowledge and understanding are recognized in the income statement as an incurred expense.

Goodwill represents the excess of the cost of an acquisition of a subsidiary, associate, or jointly controlled entity over the Group’s share in the fair value of the identifiable assets and liabilities of the acquired entity at the date of acquisition. Goodwill is recognized at cost less any accumulated impairment losses.

Internally generated customer relationships are not capitalized.

Development costs are defined as costs incurred for the design of new or substantially improved products and for

Goodwill from associates and joint ventures is presented in the balance sheet as ‘Investments accounted for under the equity method’, together with the investment itself.

Loans and receivables are carried at amortized cost less any impairment.

2.10 INVENTORY

To assess an impairment, goodwill is allocated to a CGU. At each balance sheet date, CGUs are tested for impairment, meaning an analysis is performed to determine whether the carrying amount of goodwill allocated to each CGU is fully recoverable. If the carrying amount is not fully recoverable, an appropriate impairment loss is recognized in the income statement. These impairment losses are never reversed.

The excess of the Group’s share in the fair value of the net identifiable assets acquired over the cost of acquisition is recognized immediately in the income statement.

2.8 LEASE Lease operations can be divided into two types: 2.8.1 Finance lease Leases under which the Company assumes a substantial part of the risks and rewards of ownership are classified as finance leases. They are recorded at inception of the lease at fair value or, if lower, at the present value of the estimated lease payments, less accumulated depreciation and impairment losses.

Each lease payment is allocated between the liability and finance charges. The rental obligations, net of finance charges, are included in long-term payables. The interest element is charged to the income statement over the lease period. Assets under finance lease are depreciated over the shorter of their useful life and the lease term.

Inventories are carried at the lower of cost and net realizable value. Cost comprises direct purchase or manufacturing costs and an appropriate allocation of overheads.

Inventories are classified as: 1.

2.

3.

4.

Base products with metal hedging Base products without metal hedging Consumables Advances paid

Base products with metal hedging are metal-containing products for which Cumerio is exposed to metal price fluctuation risks and where Cumerio applies an active and structured risk management to minimize potential adverse effects on the financial performance of the Group.

The metals are classified in inventory categories that reflect their specific nature and business use. Appropriate hedging mechanisms are applied (see chapter 2.22 on Financial instruments). A weighted average is applied per category of inventory.

Base products without metal hedging and consumables are valued using the weighted-average method.

Write-downs on inventories are recognized when the carrying amount exceeds the net realizable value. Writedowns are presented separately.

Advances paid are down-payments on transactions with suppliers for which the physical delivery has not yet taken place and are booked at nominal value.

2.8.2 Operating lease 2.11 TRADE AND OTHER RECEIVABLES Leases under which a substantial part of the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Payments under operating leases are considered as an expense in the income statement.

Trade receivables are measured at amortized cost, i.e., at the net present value of the receivable amount. The nominal value is taken unless the impact of discounting is material. Receivables are written down for unrecoverable amounts.

2.9 FINANCIAL ASSETS Financial assets are classified into the following categories: • Available for sale financial assets • Loans and receivables Available for sale financial assets are carried at fair value.

Unrealized gains and losses from changes in fair value of such assets are recognized in equity as fair value reserves.

When the assets are sold, the accumulated fair value adjustments are included in the income statement as gains and losses.

Assets in respect of which substantially all the risks and rewards have been transferred - or for which all the risks and rewards have not been transferred but the control of which has not been retained – are derecognized from the balance sheet.

Fair value gains on derivatives are included in trade and other receivables.

2.12 CASH AND CASH EQUIVALENTS

2.15 MINORITY INTERESTS

Cash includes cash in hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash, have maturity dates of three months or less and are subject to an insignificant risk of change in value.

Minority interests include a proportion of the fair value of identifiable assets and liabilities recognized upon acquisition of a subsidiary, together with the appropriate proportion of subsequent profits and losses.

Bank overdrafts are included in the current liabilities on the balance sheet.

2.13 IMPAIRMENT OF NON-FINANCIAL ASSETS

In the income statement, the minority share in the Company’s profit or loss is presented separately from the Company’s consolidated result.

2.16 PROVISIONS Provisions are recognized on the balance sheet when:

54

Property, plant and equipment and other non-current assets, including intangible assets, are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated.

The recoverable amount is the higher of an asset’s net selling price and its value in use. To estimate the recoverable amount of individual assets, the Company often determines the recoverable amount of the cashgenerating unit (CGU) to which the asset belongs.

Whenever the carrying amount of an asset exceeds its recoverable value, an impairment loss is immediately recognized as an expense.

A reversal of impairment losses is recognized when there is an indication that the impairment losses recognized for the asset or for the CGU no longer exist or have decreased. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognized.

2.14 SHARE CAPITAL AND RETAINED EARNINGS Share buybacks : When the Company purchases some of its own shares, the consideration paid - including any attributable transaction costs, net of income taxes - is deducted from the total shareholders’ equity as treasury shares. No gain or loss shall be recognized in profit or loss on the purchase, sale, issue or cancellation. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds, net of tax.

Dividends of the parent company payable on ordinary shares are only recognized as a liability following approval by the shareholders.

• T here is a present obligation (legal or constructive) as a result of a past event • It is probable that an outflow of resources will be required to settle the obligation • A reliable estimate can be made of the amount of the obligation A constructive obligation is an obligation that derives from Company actions where, by an established pattern of past practice or published policies, the Company has indicated that it will accept certain responsibilities and, as a result, the Company has created a valid expectation that it will discharge those responsibilities.

The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the balance sheet date and taking into account the probability of the possible outcome of the event. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. The result of the yearly discounting of the provision, if any, is accounted for as financial result.

The main types of provisions are as follows: 1. P rovisions for employee benefits (See chapter 2.17 on Employee benefits) 2. Provisions for environmental obligations Environmental provisions are recognized based on legal and constructive obligations from past events, in accordance with the Company’s environmental policy and applicable legal requirements. The full amount of the estimated obligation is recognized.

3. Other provisions Other provisions include those for litigation, onerous contracts (see chapter 2.22.1 on Transactional risks – Fair value hedging), warranties and restructuring.

A provision for restructuring is recognized when the Company has approved a detailed and formal restructuring plan and the restructuring has either commenced or has been announced publicly before the balance sheet date. Any restructuring provision only includes the direct expenditure arising from the restructuring which is necessarily entailed and is not associated with the ongoing activities of the Company.

2.17.2.2 Defined contribution plans The Company pays contributions to publicly or privately administered insurance plans. The payments are recognized as expenses as they fall due and, as such, are included in personnel costs.

2.17.3 Other long-term employee benefits (jubilee premiums)

2.17 EMPLOYEE BENEFITS 2.17.1 Short-Term Employee Benefits These include wages, salaries and social security contributions, paid annual leave and sick leave, bonuses and non-monetary benefits. These items are taken as an expense in the relevant period. Bonuses to company managers are based on key financial targets and other indicators. The amount of the bonuses is recognized as an expense, based on an estimate at the balance sheet date.

2.17.2 P ost employment benefits (pensions, medical care) The Company has various pension and medical care schemes in accordance with the conditions and practices of the countries it operates in. The schemes are generally funded through payments to insurance companies or trustee-administered funds.

2.17.2.1 Defined benefit plans The Company is accounting for all legal and constructive obligations, both under the formal terms of defined benefit plans and under the Company’s informal practices.

The amount presented in the balance sheet is based on actuarial calculations (using the projected unit credit method) and represents the present value of the defined benefit obligations as adjusted for unrecognized past service costs, and as reduced by the fair value of the plan’s assets.

Unrecognized past service costs result from the introduction of new benefit plans or changes in the benefits payable under an existing plan. Past service costs for which the benefits are not yet vested (i.e., the employees must deliver employee services before the benefits are granted) are amortized on a straight-line basis over the average period after which the new or amended benefits become vested.

All actuarial gains and losses following changes in the actuarial assumptions of post-employment defined benefit plans are recognized through equity in the period in which they occur and are disclosed in the statement of income and expense as post-employment benefit reserves.

These benefits are accrued for their expected costs over the period of employment using an accounting methodology similar to that of defined benefit pension plans. These obligations are in general valued annually by independent qualified actuaries. All actuarial losses or gains are immediately recognized in the income statement.

2.17.4 Termination benefits (pre-retirement plans, other termination obligations) These benefits arise as a result of the Company’s decision to terminate an employee’s employment before the normal retirement date or of an employee’s decision to accept voluntary redundancy in exchange for those benefits. Future obligations are also recognized when they are reasonably predictable in accordance with the conditions and practices of the countries in which the Company operates.

These benefits are accrued for their expected costs over the period of employment, using an accounting methodology similar to that of defined benefit plans.

In general, these obligations are valued annually by independent qualified actuaries. All actuarial losses or gains are immediately recognized in the income statement.

2.17.5 Equity and equity-related compensation benefits (Share based payments IFRS 2) Stock option programmes allow senior management to acquire shares of the Company. In accordance with Belgian law, the exercise price of the options is determined based on the average closing prices of the share for the 30 listing days prior to the decision by the Board of Directors.

These options are vested at the date of the grant and their fair value is recognized as an employee benefits expense with a corresponding increase in equity as share-based payment reserves.

The expense to be recognized is calculated by an actuary, using a valuation model which takes into account all features of the stock options programme, the volatility of the underlying stock and an assumed exercise pattern.

2.17.6 Presentation

2.21 REVENUE RECOGNITION

The employee benefits are recorded under operating results in the income statement, except for the interest cost and the return on the assets of the defined benefit plans. These are classified under financial results.

2.21.1 Goods sold and services rendered

2.18 FINANCIAL DEBT Borrowings are initially recognized as received proceeds, net of transaction costs. Subsequently, they are carried at amortized cost using the effective interest rate method.

Amortized cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

2.19 TRADE AND OTHER PAYABLES

56

Trade payables are measured at amortized cost, i.e., at the net present value of the payable amount. The nominal value is taken, unless the impact of discounting is material.

Fair value losses on derivatives are included in Trade and other payables.

2.20 INCOME TAXES Taxes on profit or loss of the year include current and deferred tax. Such taxes are calculated in accordance with the tax regulations in effect in each country the Company operates in.

Revenue from the sale of goods in transformation activities is recognized when significant risks and rewards of ownership have been transferred to the buyer, and no significant uncertainties remain regarding recovery of the consideration due, associated costs or the possible return of the goods.

Revenue from refining activities is recognized when the metal reference stage is reached. Metal reference is a generally recognized standard form of metal, with defined metal content, traded on well-established commodities markets.

Revenue from services rendered is recognized by reference to the stage of completion of the transaction when this can be measured reliably.

2.21.2 Government grants A government grant is accounted for in the balance sheet initially as deferred income when there is a reasonable assurance that it will be received and that the Company will comply with the conditions attached to it. Grants are recognized in the income statement over the period necessary to match them with the costs they are intended to compensate.

2.22 F INANCIAL INSTRUMENTS IAS 39 (hedging)

Current tax is the expected tax payable on the taxable income of the year, using tax rates in force at the balance sheet date, and any adjustment to tax payable (or receivable) in respect of previous years.

The Company uses derivative financial and commodity instruments primarily to reduce the exposure to adverse fluctuations in foreign exchange rates, interest rates, commodity prices and other market risks.

Deferred taxes are calculated using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. These taxes are measured using the tax rates that will apply when the asset is recovered and the liability settled.

The Company uses mainly spot and forward contracts to cover the metal price and currency risks.The transactions carried out on the futures markets are not of a speculative nature. To hedge part or all of the interest rate exposure from fixed or floating rate borrowings, the Company can use interest rate swaps.

Deferred tax assets are only recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

2.22.1 Transactional risks - fair value hedging

Deferred tax assets and liabilities are offset and presented net, only if they relate to income taxes levied by the same taxation authority on the same taxable entity.

Derivative financial and commodity instruments are used to protect the fair value of the underlying hedged items (assets, liabilities and firm commitments) and are recognized initially at cost.

All derivative financial and commodity instruments are subsequently measured at fair value at the balance sheet date via the “Mark-to-Market� mechanism. All gains and losses are immediately recognized in the income statement - as an operational result for commodity instruments and as a financial result in all other cases.

Hedged items such as physical commitments and commercial inventories, are also valued at fair value when hedge accounting can be documented in accordance with the IAS 39 criteria.

In the absence of hedge accounting, the hedged items are kept at cost and are subject to the valuation rules applicable to similar non hedged items, e.g., the recognition at the lower of cost and market (IAS 2) for inventories, or the recognition of provisions for onerous contracts (IAS 37) for physical commitments.

The Company applies fair value hedge accounting when hedging the interest rate exposure from fixed rate borrowings. The changes in fair value of interest rate swaps and of fixed rate borrowings are recognized in the income statement within finance costs.

2.23 NON-RECURRING RESULTS AND IAS 39 EFFECT Non-recurring results relate to restructuring measures, impairment of assets and other income or expenses arising from events or transactions that are clearly distinct from the ordinary activities of the Company.

The IAS 39 effect relates to non-cash timing differences in revenue recognition due to the non-application of IAS 39 hedge accounting to transactional hedges, which means that hedged items can no longer be measured at fair value and must be subject to the valuation rules applicable to similar non-hedged items. This has created some non-cash P&L volatility which the Company has decided to exclude from recurring operating, financial and tax results, with a view to preserving the readability and comparability of the financial statements.

2.22.2 Strategic risks - cash flow hedging Note 12 provides details on these results.

Derivative financial and commodity instruments related to the protection of future cash flows are designated as hedges qualifying for cash flow hedge accounting under the provisions of IAS 39. The effective portion of the change in the fair value of the hedging instruments which qualify as cash flow hedges is recognized in the shareholders’ equity until the underlying forecasted or committed transactions occur (i.e., affect the income statement). At that time, the recognized gains and losses on the hedging instruments are transferred from equity to the income statement.

When a hedging instrument is exercised or matures before the underlying forecasted or committed transactions occur, the gains or losses are maintained in equity until the hedged transactions occur.

If the hedged transactions are no longer probable or the hedges become ineffective, then any gains or losses which were initially recorded in equity are immediately recognized in the income statement.

3. Impact of the amended IAS 19 standard on the financial statements policy is applied retrospectively and the comparables are restated as required by IAS 8.

New IFRS standards for which application is mandatory on or after 1 January 2006 is limited to the amended IAS 19 standard ‘Employee Benefits’.The change in accounting

(€ thousand)

Share capital and Retained share earnings premiums

Balance at 1 January 2005 as published

212 502

Profit (Losses) for the year

80 086

Fair value & Minority TOTAL other interest reserves

4 337

234 297 159

Change in accounting policies - Employee benefits IAS 19 - amended

(a)

- Deferred tax IAS 19 - amended

(b)

Balance restated at 1 January 2005

58

48

234 297 066

Balance at 31 December 2005 as published 212 502 72 375 42 678 12 794

345 340 694

80 086

48

(141)

4 244

Change in accounting policies

212 502

(141)

- Employee benefits IAS 19 - amended

(a)

- Deferred tax IAS 19 - amended

(b)

(124)

911

212 502

72 375

42 646

11 298

Balance restated at 31 December 2005

(a) All actuarial gains and losses following changes in the actuarial assumptions of post-employment defined benefit plans are recognized in equity in the period in which they occur and are disclosed in the Statement of recognized income and expense as post employment benefit reserves. On 1 January 2005, a loss of €141 thousand was recognized in equity. During 2005 an actuarial loss of €2,266 thousand has been recognized, leading to an accumulated actuarial loss of €2,407 thousand at the end of 2005. The €92 thousand impact on the 2005 income statement represents the

92 (2 407)

(2 315)

787

345 339 166

reversal of the amortization of unrecognized losses of the period in the income statement as they are fully recognized directly in equity. (b) The related deferred taxes on the gains and losses recognized are equally recognized directly in equity when appropriate.

The cash flow statement 2005 has not been restated as the amendment of IAS 19 has an immaterial impact on the presentation.

4. Financial risk management Each of Cumerio’s activities is exposed to a variety of risks: market risk (including changes in metal prices, foreign currency exchange rates, and certain commercial terms), credit risk, liquidity risk, and interest rate risk. The company’s overall risk management programme seeks to minimize any adverse effects on its financial performance by hedging some of these risks through the use of various financial instruments.

Risk management is carried out by the Treasury and Metal Hedging departments, under policies approved by the Board of Directors.

4.1. Market risk 4.1.1 Currency risk Currency risks can be split into three distinct categories: structural, transactional, and translational risk.

4.1.1.1 Structural risk The largest portion of Cumerio’s revenues is denominated in US dollar, while its costs are mostly in euro or Bulgarian lev, which is linked to the euro. Any change in the €/US$ exchange rate will therefore have an impact on the company’s results. This currency exposure derives mainly from treatment and refining charges for copper concentrates, the cathode producer premium, the metal surplus that is recovered from treatment, and, to a lesser extent, the refining charges for anodes and blister.

Cumerio has a policy of hedging part of its structural US dollar exposure. This is done either in isolation or in combination with hedging its structural metal price exposure when currency exchange rates or metal prices denominated in euro are at a level where attractive margins can be secured.

Beginning in the last quarter of 2005, Cumerio had set up several hedging arrangements for 2006 to secure

the company’s profitability and cash flows. In 2006, the effective exchange rate for Cumerio was €/US$1.235.

The average exchange rate was €/US$1.259. Cumerio recently began hedging a part of its structural US dollar exposure for 2007. As of 21 February 2007, Cumerio had hedged approximately 60% of its structural US dollar exposure for 2007 at approximately €/US$1.305.

In the absence of any hedging of the US dollar and at current exchange rates, a strengthening of the US dollar by one US cent against the euro would lead to an increase in the group’s operating results on the order of €1.4 million per year. Conversely, a weakening of the US dollar by one US cent against the euro would give rise to a decrease in Cumerio’s consolidated operating results of the same magnitude on an annual basis.The decreased sensitivity compared with the prior year reflects the lower US dollar-denominated revenues expected for 2007, in particular treatment and refining charges for copper concentrates.

The sensitivities discussed above should be seen as a short-term indication only and are somewhat theoretical.

Exchange rate levels often impact commercial conditions negotiated in US dollar as well as certain elements outside of Cumerio’s control. For example, a US dollar exchange rate whose variations may impact US dollar-denominated metal prices and treatment and/or refining charges, can in turn have an effect on Cumerio’s earnings.

As set out in chapter 2.22 of the Accounting Policies, these hedging instruments qualify as cash flow hedges and any change in their fair value is recognized in equity.

4.1.1.2 Transactional risk The company is also subject to transactional risks in respect of currencies, that is, the risk of currency exchange rates fluctuating between the time the price is fixed with a customer or supplier and the time the transaction is settled. Cumerio systematically hedges such transactional risks, primarily through spot and forward contracts.

As set out in chapter 2.22 of the Accounting Policies, these hedging instruments are measured at fair value on each balance sheet date while the underlying hedged items are generally measured at the lower of cost and market price.This is allowed as Cumerio does not meet the strict criteria of the IAS 39 accounting standard.This will induce timing differences in revenue recognition and create an element of non-cash P&L volatility. The company has decided to exclude this from the definition of recurring operational, financial and tax results to improve the readability and comparability of the financial statement.

4.1.1.3 Translational risk Some Cumerio operations do not use the euro as their functional currency. In Switzerland, for instance, the Swiss franc is used. When the results of Swiss Advanced Materials (SAM) are consolidated into the Cumerio group accounts, the translated amount is exposed to variations in the value of the Swiss franc against the euro.

Cumerio does not hedge against such risk.

The US dollar was the functional currency for Cumerio Med in Bulgaria until the end of 2005. However this was changed to the euro as of January 2006.

4.1.2. Metal Price Risk Metal price risks can be split into two categories: structural and transactional risk.

4.1.2.1. Structural risk Cumerio is exposed to structural metal related price risks. Those risks originate mainly from the impact that metal prices have on treatment and refining charges for copper concentrates (through the existence of price participation clauses) and on surplus metals recovered during treatment of the materials. These risks primarily relate to copper, gold, and silver and can be hedged using metal derivatives, mostly on the London Metal Exchange.

Price participation is one of the side clauses in contracts between miners and smelters whereby both parties agree to share part of the benefits or losses that result from a copper price that exceeds, or falls below, an agreed upon level. Cumerio has generally benefited less from price participation than some of its peers as most of its contracts were negotiated at a time when copper prices were low. Recent market trends suggest that price participation clauses may be removed or significantly curtailed with effect from this year. Cumerio has a policy of hedging part of this structural metal price exposure.

This is done either in isolation or in combination with the hedging of its structural US dollar exposure when metal prices are at a level where attractive margins can be secured. Cumerio took advantage of strengthening metal prices during 2006 to start hedging part of its structural metal price exposure for 2007. By 21 February 2007, 70% of Cumerio’s exposure to metal prices for 2007 has already been hedged, at US$7,044 per tonne of copper, US$663 per ounce of gold, and US$12.85 per ounce of silver. Similarly, 50% of Cumerio’s exposure to metal prices for the years 2008 and 2009 has already been hedged.

As set out in chapter 2.22 of the Accounting Policies, the hedging instruments related to surplus metals qualify as cash flow hedges and any change in their fair value is

recognized in equity. The hedging instruments in respect of price participation clauses qualify as fair value hedges and changes in the fair value of both those hedges and the underlying hedged items are recognized in the income statement.

4.1.2.2.Transactional risk Cumerio is also exposed to transactional price risks on metals purchased and sold. Transactional risk is the risk related to metal price fluctuations between the time the price is fixed with a customer or a supplier and the time the transaction is settled. The raw materials used and the metals or products manufactured by Cumerio are generally purchased and sold on the same basis, using the relevant London Metal Exchange quotations. This allows the use of certain hedging instruments. Cumerio’s policy is to hedge the transactional risk as much as possible, primarily through forward contracts.

60

As set out in chapter 2.22 of the Accounting Policies, these hedging instruments are measured at fair value on each balance sheet date while the underlying hedged items are generally measured at the lower of cost and market. This is allowed as Cumerio does not meet the strict criteria of the IAS 39 accounting standard. This will induce timing differences in revenue recognition and create an element of non-cash P&L volatility. The company has decided to exclude this from the definition of recurring EBIT to improve the readability and comparability of the financial statement.

4.2 Other commercial risks Cumerio is exposed to certain other commercial risks related to the supply of raw materials or unavoidable waste streams as a result of the various production processes.

The most significant exposure arises from the need for copper concentrates. Cumerio processes approximately 850,000 tonnes of copper concentrates annually, of which approximately 55% originate from Bulgaria and other countries in the Black Sea region. Each US cent per pound increase or decrease in the annually negotiated treatment and refining charges (TC&RCs) will result in a US$4.7 million increase or decrease in Cumerio’s 2007 operating results. There is a similar though lower exposure to other raw material, including copper blister, anodes, and scrap. Cumerio seeks to ensure supply and reduce the effect of short-term changes in treatment and/or refining charges by entering into long-term supply arrangements.

Regarding the waste streams, the most significant exposure arises from the production of sulphuric acid, a by-product when smelting copper in Bulgaria. Cumerio produces approximately 850,000 tonnes of sulphuric acid

per year, primarily sold in Bulgaria and other countries in the Black Sea region, under long-term supply contracts.

4.3 Credit Risk Credit risk is the risk related to non-payment by any counterparty for the purchase of goods. Cumerio’s customer portfolio is characterized by a large number of clients. But, there are a limited number of large customers, causing a concentration of risk on certain companies and countries. In order to manage credit risk exposures, Cumerio has introduced a credit management policy approved by the Board of Directors, including credit limits, approval procedures, and a continuous monitoring process. Group Treasury is responsible for ensuring full compliance with the credit policy within Cumerio. A Group Credit Committee has been set up to manage and control any credit related issues.

The company has decided to cover credit risks by entering into a credit insurance coverage with a first class European credit insurance company.The contracts cover all parts of the world. Sales are generally credit insured for political and commercial risks with an individual deductible of 10% per invoice. The credit insurance coverage is subject to a global maximal indemnification cap in the order of €63 million per year. Some of the receivables are sold on a non-recourse basis through a securitization programme or certain factoring arrangements.

There has been a significant increase in credit risk exposures during the year as a result of increased deliveries of copper products and the increase in copper prices. Although the credit limits granted by the credit insurance company were frequently raised, Cumerio has been exposed to increased credit risks during the year since, in some cases, the outstanding amounts exceeded the granted credit insurance lines.

To cover these uninsured balances, Cumerio closed a complementary credit insurance coverage with another insurance company with a maximal indemnification cap of € 5 million per year. In certain cases, Cumerio also decided to stop responding to increasing demands from some customers.

In 2006, payment defaults were less than €100,000.

4.4 Liquidity Risk Prudent liquidity risk management implies maintaining sufficient and diversified availability of funds. In order to achieve this, the company holds an appropriate mix of committed and uncommitted short-term credit facilities, in addition to the five-year €110 million revolving credit facility finalized in 2005 and the seven-year €125 million bond that was issued in July 2006. With a view to creating more flexibility, Cumerio has also set up a €100 million commercial paper programme at the end of 2006.

4.5 Interest Rate Risk Cumerio’s exposure to changes in interest rates arises mainly from its financial debt obligations and securitization programme. At the end of 2006, the company’s net financial debt amounted to €131.9 million, of which approximately 50% was subject to floating interest rates.

In order to manage part of its costs for funding and to achieve a reasonable balance between fixed and floating interest rates, Cumerio has decided to swap 50% of the fixed interest payable under the seven-year notes issue into floating interest.

5. C ritical accounting estimates and judgements The preparation of the financial statements requires management to make assumptions and estimates that have an impact on the measurement of assets and liabilities in the consolidated balance sheet and income statement.

Assumptions and estimates are among other things applied when: • Assessing the need for, and measurement of, impairment losses on fixed assets, when calculating discounted cash flows • Accounting for pension obligations

• R ecognizing and measuring provisions for tax, environmental, and litigation risks, and restructuring • Determining inventory write-downs • Assessing the extent to which deferred tax assets will be utilized • Determining the useful lives of property, plant and equipment and intangible assets.

The assumptions and estimates are disclosed in the notes related to the item for which they were used for measurement.

6. Group companies Below is a list of the companies included in the consolidated financial statements:

Belgium

Cumerio

Cumerio Belgium Bulgaria

Cumerio Med JSCO

Cumerio Bulgaria Italy

Cumerio Italia Austria

Cumerio Austria Switzerland

Swiss Advanced Materials AG

% interest 2006

Registered Office

100.00 100.00

99.77 100.00

100.00

100.00

51.34

VAT number

Broekstraat 31 Rue du Marais, 1000 Brussels BE 873-533-993 Broekstraat 31 Rue du Marais, 1000 Brussels BE 859-575-891 2070 Pirdop Yanko Zabunov Street 3, 1408 Sofia Via Pontaccio 10, 20121 Milano Tuchlauben 17, 1014 Vienna Y-Parc, Rue Galilée 15, 1400 Yverdon-les-Bains

7. Foreign currency measurement For the main currencies applicable within the group’s consolidated entities and investments, the prevailing rates used for translation into the group’s presentation

currency (€) are as set out below. The subsidiaries have as functional currency the currency of the country in which they operate.

Closing rates

Average rates

2006

2005

2006

2005

American Dollar

USD

1.31700

1.17970

1.25560

1.24409

New Bulgarian Lev

BGN

1.95580

1.95630

1.95580

1.95580

Swiss Francs

CHF

1.60690

1.55510

1.57288

1.54828

The financial debt of the Bulgarian entities has been drawn partly in euros at 1 January 2006. Combined with an adapted hedging procedure in compliance with the

company’s policy, this has led to the change in functional currency for the Bulgarian entities with effect from 1 January 2006.

8. Segment information PRIMARY SEGMENT INFORMATION at 31 December 2006 (by segment) (â‚Ź thousand)

62

Refining

Products

Total segment revenues

2 572 022

2 216 569

of which external revenues

1 178 725

of which inter-segment revenues

1 393 297

Operating result of which recurring

Unallocated

Total

(1 393 266)

3 395 325

2 216 569

31

3 395 325

(1 393 297)

97 540

9 021

(7 632)

98 929

93 271

8 187

(7 632)

93 826

of which non-recurring

1 759

1 759

of which IAS 39 effect

2 510

834

3 344

Net financial cost

(16 348)

(16 348)

of which recurring

(13 361)

(13 361)

of which IAS 39 effect

(2 987)

(2 987)

Income taxes

(10 267)

(10 267)

of which recurring

(10 276)

(10 276)

of which non-recurring

(185)

(185)

of which IAS 39 effect

194

194

Minority interest

185

185

Net profit for the year

72 499

of which recurring

70 374

of which non-recurring

1 574

of which IAS 39 effect

551

Consolidated total assets

598 476

229 405

116 134

944 015

Segment assets

598 476

229 405

19 314

847 195

Unallocated assets

96 820

96 820

Consolidated total liabilities

264 387

25 951

254 036

544 374

Segment liabilities

264 387

25 951

16 288

306 626

Unallocated liabilities

237 748

237 748

Capital expenditure

40 452

5 254

2 843

48 549

Depreciation and amortization

30 665

5 490

25

36 180

Non-cash expenses other than depreciation

(2 662)

(2 662)

PRIMARY SEGMENT INFORMATION at 31 December 2005 (by segment) (â‚Ź thousand)

Refining

Products

Unallocated

Total

1 482 576

1 225 972

(742 940)

1 965 608

of which external revenues

739 636

1 225 972

1 965 608

of which inter-segment revenues

742 940

(742 940)

Operating result

64 279

5 174

(4 575)

64 878

of which recurring

66 969

5 694

(3 547)

69 116

of which non-recurring

(3 834)

(583)

(1 028)

(5 445)

1 144

63

1 207

Net financial cost

(7 064)

(7 064)

of which recurring

(7 524)

(7 524)

of which non-recurring

(484)

(484)

of which IAS 39 effect

944

944

Income taxes

(15 085)

(15 085)

of which recurring

(13 454)

(13 454)

of which non-recurring

(1 261)

(1 261)

of which IAS 39 effect

(370)

(370)

Minority interest

(84)

(84)

Net profit for the year

42 645

Total segment revenues

of which IAS 39 effect

of which recurring

48 054

of which non-recurring

(7 190)

of which IAS 39 effect

1 781

Consolidated total assets

517 605

142 386

111 960

771 951

Segment assets

517 605

142 386

17 503

677 494

94 457

94 457

Consolidated total liabilities

222 507

27 388

182 890

432 785

Segment liabilities

222 507

27 388

11 345

261 240

Unallocated assets

Unallocated liabilities

171 545

171 545

Capital expenditure

12 203

3 583

1 501

17 287

Depreciation and amortization

27 158

4 104

402

31 664

Non-cash expenses other than depreciation

999

999

7 518

7 518

Impairment losses/ (Reversal of impairment losses)

The primary segment information is presented in respect of the group’s segments.

Business segments The group is organized in two business units:

The two segments correspond to the business units, as defined below, and meet the segment criteria set forward by IFRS. The segment results, assets and liabilities include items directly attributable to the segment as well as those elements that can reasonably be allocated to such segment. The pricing of inter-segment sales is based on an arm’s length transfer pricing system. In the absence of relevant market price references, ‘cost plus’ mechanisms are used.

64

Unallocated results cover mainly corporate costs, financial results and taxes. Unallocated assets and liabilities include deferred and current taxes, long-term provisions for employee benefits, the fair value of the transactional hedges, financial debts, and cash and cash equivalents.

Copper Refining includes the smelting and refining operations located in Pirdop, Bulgaria and Olen, Belgium. Cumerio sources about 20% of the feed for its Olen refinery from Metallo-Chimique nv and its subsidiaries. Therefore the financial investment in Non Ferrous International nv (holding company of MetalloChimique) is included in the assets of the Refining segment (see note 18).

Copper Products includes the transformation activities of copper into products such as wire rod, specialty rod, complex profiles, wires, cakes, and billets. The installations are located in Olen, Belgium, Avellino, Italy and in Yverdon-les-Bains, Switzerland.

SECONDARY SEGMENT INFORMATION at 31 December 2006 (by Geographical Area)

Belgium Italy Germany Black Sea (€ thousand) region

Other Other non- Europe Europe

Total

Total segment revenues

391 065 774 906 476 725 545 443 827 474 379 712 3 395 325

Total segment assets

363 721

74 598

Capital expenditure

9 250

540

491 445

37 766

14 250 944 014 993

48 549

SECONDARY SEGMENT INFORMATION at 31 December 2005 (by Geographical Area)

Belgium Italy Germany Black Sea (€ thousand) region

Other Other non- Europe Europe

Total

Total segment revenues

240 073 423 932 226 722 277 692 650 161 147 028 1 965 608

Total segment assets

326 279

50 240

Capital expenditure

6 858

530

Geographical segments The group’s two business segments operate in six main geographical areas.The Black Sea region includes Bulgaria, Turkey, Romania, Cyprus, Greece, and Serbia. The most significant countries in ‘Other Europe’ are France, the United Kingdom, the Netherlands, and Switzerland.

395 411

9 899

21 771 951

17 287

9. Business combinations (€ thousand)

Notes

30/04/06

Intangible assets

16

504

Tangible assets

17

7 119

Inventories

697

Trade & other receivables

2 027

Cash

3 949

TOTAL ASSETS

14 296

Non-current liabilities

8 392

Current bank loans

1 144

Trade debt & other payables

3 914

TOTAL LIABILITIES

13 450

Group share in net assets acquired

434

Translation adjustment

16

151

Goodwill

16

4 947

Purchase price Net cash and cash equivalents acquired

5 532

(3 949)

Net cash out

1 583

In April 2006, Cumerio has taken a stake of 51% in Swiss Advanced Materials sa (SAM), established in 2002 in Yverdon-les-Bains, Switzerland.

SAM develops, produces, and sells profiles made out of copper and low-alloyed copper mainly serving the electro-technical industries. SAM is a leader in using the ConformTM-technology, offering a high potential for complex profiles. ConformTM applications represent an

important part of Cumerio’s specialty rod business.

By taking a majority stake in SAM, Cumerio is enlarging its technology portfolio which will boost the development of new higher added-value products based on its expertise in specialty rod and is using SAM as its R&D platform.

Besides Cumerio, the other SAM shareholders are Pyrois Privatstiftung of Austria and SAM’s current management.

10. Operating income (€ thousand)

2006

2005

Sales

3 374 496

1 948 464

Services

20 829

17 144

Revenues

3 395 325

1 965 608

27 857

11 721

Other operating income Services mainly include the revenues from tolling contracts.

Other operating income covers mainly the re-billing of expenses or services, income from government grants, and the results from financial instruments that, in compliance with IAS 32, have to be classified as other operating income rather than as sales, when hedge accounting is not applied.

11. Other operating expenses (€ thousand)

2006 2 586

1 897

Rents and related charges

1 833

1 227

Subcontracted major repair & maintenance expenses

5 151

4 918

6 595

9 812

Subcontracted transport

27 330

25 513

Other services subcontracted & other consumables

21 972

19 601

2 816

2 799

Expenses capitalized as fixed assets

(7 648)

(2 436)

Capital losses on disposal of assets

20

56

60 655

63 387

Fees, commissions, and insurance

Other operating expense

Other operating expenses

66

2005

Miscellaneous taxes, other than income tax

The recurring other operating expenses decreased during 2006 by € 1,704 thousand from € 62,359 thousand in 2005. Non-recurring other operating expenses for the year 2005 were €1,028 thousand. There were no non-

recurring other operating expenses in 2006. (see note 12) The €5,212 thousand increase in capitalized expenses up to €7,648 thousand in 2006 relates mainly to the investment programme in Bulgaria. (see note 17)

12. Non-recurring results and impact of IAS 39 included in operating results Non-recurring results included in operating results Non-recurring results for 2006 and 2005 are included in the following items of the income statement, (gain, (loss)). (€ thousand)

2006

2005

Raw materials and consumables used

2 478

3 486

Payroll and related benefits

(719)

(385)

Depreciation and impairment results

(7 518)

Other operating expenses

(1 028)

Operating expenses

1 759

(5 445)

RESULT FROM OPERATING ACTIVITIES

1 759

(5 445)

Non-recurring results for 2006 include a write-back on inventories and expenses relating to a voluntary redundancy plan in Bulgaria.

Non-recurring results for 2005 include the positive

impact from an inventory adjustment, an adjustment to employee benefits related provisions, the company’s share in the cost of the Umicore de-merger, and the impairment loss recognized on the investment in Non Ferrous International nv (NFI).

The impact of IAS 39 included in operating results (€ thousand) Revenues

2006

2005

(19 794)

689

Other operating income

18 236

4 196

Operating income

(1 558)

4 885

148

76

Increase and reversal of provisions

(5 050)

3 602

Operating expenses

(4 902)

3 678

3 344

1 207

Depreciation and impairment results

RESULT FROM OPERATING ACTIVITIES

IAS 39 has introduced a number of documentation requirements to be met for the application of fair value hedge accounting. The inability to meet those very strict criteria leads to a situation where hedging instruments are measured at fair value while hedged items are measured at cost (or lower of cost and market). This induces timing differences in revenue recognition and creates an artificial non-cash P&L volatility and potentially misleading results, contradicting the actual objective of Cumerio’s hedging policy with respect to transactional risks. Therefore, the company has decided to exclude these timing differences from the recurring operating results, in order to preserve the readability and comparability of the financial statements.

Hedged items, such as the commercial stocks and the physical commitments, are subject to the standards IAS 2, Inventories (lower of cost and market) and IAS 37, Provisions (onerous contracts).

he notion of onerous contract provisions allows T the recognition of losses (similar to a negative markto-market) for loss-making contracts, or commercial contracts leading to an opportunity loss when compared to market conditions. The recognition of such provisions has reduced the accounting timing differences at 31 December 2005. This approach does however not allow the recognition of positive mark-to-markets on physical commitments as was the case at the end of 2006.

Commercial stocks are measured at a monthly weighted average. Positive mark-to-markets on commercial stocks are therefore less material. Negative mark-to-markets continue to be recognized in accordance with the “lower of cost and market” principle.

The results from financial instruments for which fair value hedge accounting cannot be applied are classified under “Other operating income”.

13. Payroll and related benefits (€ thousand)

Notes

2006

2005

Wages, salaries and direct social advantages

35 690

35 405

Employer’s social security and contribution to defined benefit plans

14 779

14 513

Temporary staff

518

84

Contribution to defined contribution plan

955

645

Employer’s voluntary contributions - other

153

86

Share based payments

694

692

Pensions paid directly to beneficiaries

215

102

Provisions for employee benefits (increase / (use and reversals))

27

Total

(1 285)

(1 464)

51 719

50 063

The expense related to employee benefits provisions for 2005, has been restated by €92 thousand for the application of the IAS 19 amendments.

Average headcount in consolidated companies

2006

2005

Executives

121

115

Monthly paid

361

364

Hourly paid

1 001

1 054

Total

1 483

1 533

A second stock option plan was approved by Cumerio’s Board of Directors on 22 February 2006. The stock option plan allows senior management to acquire existing or new shares of the Company. In accordance with Belgian

legislation, the exercise price of the options is determined based on the average closing price of the Cumerio share for the 30 listing days prior to the decision of the Board.

Share-based payment arrangement

Arrangement

Share options granted to senior executives

ISOP 2006

Nature of the arrangement Date of grant

22 February 2006

22 June 2005

Number of instruments granted

183 000

282 500

Exercise price

€ 18.24

€ 11.28

Share price at the date of grant

€ 19.31

€ 12.11

7

7

none

none

New or existing shares

Existing shares

24.18%

23%

7

7

Risk-free interest rate

3.41%

2.90%

Assumed dividend yield

Contractual life (years) Vesting conditions Settlement Assumed volatility Expected option life at grant date (years)

68

ISOP 2005

Grant of share options Grant of share options

3.35%

3.35%

Assumed departures (grant date)

0%

0%

Assumed outcome of meeting performance criteria (at the grant date)

n/a

n/a

Fair value per granted instrument determined at the grant date Valuation model The expense to be recognized is calculated by an external actuary, using the Black & Scholes valuation model which takes into account all features of the stock option plan and the volatility of the underlying stock. The share

€ 3.79

€ 2.45

Black & Scholes

Black & Scholes

options granted in 2006 can be settled with existing or new shares. The share options granted in 2005 can be settled with existing shares only.

14. Net finance cost (€ thousand) Interest income Other financial income Financial income Interest expense (incl. securitization) Discounting of non-current provisions Other financial expenses Non-recurring financial expenses Financial expense Recurring foreign exchange gains (losses) Foreign exchange gains (losses)- IAS 39 effect Foreign exchange gains (losses) Total Recurring financial charges for the year amounted to €13,362 thousand compared to €7,524 thousand in 2005. Net interest charges increased (€14,077 thousand compared to €8,552 thousand for 2005), reflecting the impact of the increased financial debt and rising interest rates.

2006

2005

6 145

728

18

2 219

6 163

2 947

(19 883)

(8 935)

(338)

(345)

(1 427)

(1 131)

(484)

(21 648)

(10 895)

2 124

(60)

(2 987)

944

(863)

884

(16 348)

(7 064)

The discounting of non-current provisions relates to employee benefits (see note 27).

Recurring exchange results include realized exchange gains and losses, unrealized translation adjustments in respect of monetary items using the closing rate of the

period, and realized and from unrealized fair value gains and losses from currency financial instruments and from the currency component of metal derivative instruments and from physical commitments.

In the absence of hedge accounting, the fair value gains and losses from the currency component of metal derivative

instruments and physical commitments denominated in foreign currency cannot be recognized in the Net finance cost. To ensure the readability and comparability of the financial statements, the company has elected to exclude this effect from the recurring financial results. The impact for 2006 was negative at €2,987 thousand.

15. Income taxes (€ thousand)

2006

2005

Recognized in the income statement

Current tax expense

8 230

5 510

Deferred taxes expense (income)

2 037

9 575

Total tax expense

10 267

15 085

5 510

a) Major component of tax expense (income) Current year

8 517

Current tax expense (income) related to prior year

(287)

Current year’s tax expense

8 230

5 510

Relating to the reversal of temporary differences

4 733

10 695

Relating to the recognition (origination) of temporary differences (deferred tax assets)

(1 010)

(291)

Deferred tax expense related to changes in tax rates or resulting from the use of foreign tax rates

(1 686)

Tax expenses arising from the write-down, or reversal of a previous write-down, of a deferred tax asset

Deferred tax expense (income)

2 037

9 575

Tax expense on continuing operations

10 267

15 085

(829)

b) Relationship between tax expense (income) and accounting profit Profit before tax, consolidated group companies

82 581

57 814

Tax at the domestic income tax rate of 33.99%

28 069

19 651

Adjustments on tax expenses - Sundry tax deductions

(1 845)

(72)

- Sundry amounts disallowed

1 322

7 314

- Utilization of tax losses and tax credit not previously recognized

(46)

(1 479)

- Impact of change in deferred tax rate

(1 686)

65

- Impact of different tax rates of subsidiaries operating in other jurisdictions

(15 317)

(10 788)

- Tax computed on other basis

262

345

- Previous year tax adjustments

(492)

49

Tax expense at the effective tax rate for the year

10 267

15 085

Both total tax charges for the year and recurring tax charges amounted to €10.3 million. This corresponds to an effective tax rate of approximately 12.8% on recurring pre-tax earnings, compared to 21.5% in 2005.

Recurring current taxes for the period amounted to €8.2 million, or 10.3% of the recurring pre-tax consolidated profit, compared to 7% in 2005. In addition to the favourable tax situation in Bulgaria, the introduction of

notional interest in Belgium at the beginning of the year has also had a positive effect on the group’s consolidated tax charge.

The income tax rate in Bulgaria has been reduced to 10% as from 1 January 2007. This change has a positive impact on the deferred tax liability and deferred tax charge for 2006.

16. Intangible assets

Notes Goodwill Development Concessions, Software

expenses patents,

capitalised licences, (â‚Ź thousand) etc.

Other Total intangible assets

At 31 December 2004 Gross value

3 421

3 808

7 229

Accumulated amortization

(2 147)

(1 564)

(3 711)

Net book value

1 274

2 244

3 518

. additions

68

34

102

. amortization charged

(272)

(758)

(1 030)

. translation adjustments

18

13

31

At 31 December 2005

70

Gross value

3 443

3 932

34

7 409

Accumulated amortization

(2 423)

(2 365)

(4 788)

Net book value

1 020

1 567

34

2 621

. acquisitions through business combinations

9

5 098

364

140

5 602

. additions

194

2

212

442

850

. amortization charged

(148)

(293)

(788)

(1 229)

. translation adjustments

(151)

(9)

(6)

(8)

(174)

. other movements

77

4

(70)

11

At 31 December 2006

Gross value

4 947

760

3 516

4 340

406

13 969

Accumulated amortization

(359)

(2 716)

(3 213)

(6 288)

Net book value

4 947

401

800

1 127

406

7 681

Management has tested whether the goodwill has suffered any impairment and will continue to do so on an annual basis. The recoverable amount of the goodwill which is allocated to SAM, has been determined based on

value-in-use calculations, by means of a discounted cashflow model that is based on the entity’s operational plan.

A weighted average cost of capital of approximately 8% is used as discounting factor.

17. Property, plant, and equipment

Notes Land and

buildings

(â‚Ź thousand)

Plant, machinery and equipment

Furniture and vehicles

Construction in progress and advance payments

Total

At 31 December 2004

Gross value

85 582

335 774

16 683

17 139

455 178

Accumulated depreciation

(42 354)

(182 477)

(13 950)

(238 781)

Net book value

43 228

153 297

2 733

17 139

216 397

. additions

286

3 028

349

13 499

17 162

. disposals

(78)

(72)

(121)

(765)

(1 036)

. depreciations

(3 710)

(24 770)

(812)

(29 292)

. translation adjustments

3 983

18 686

168

1 735

24 572

. other movements

3 315

22 486

538

(27 658)

(1 319)

At 31 December 2005

Gross value

95 278

384 472

17 956

3 950

501 656

Accumulated depreciation

(48 254)

(211 817)

(15 101)

(275 172)

Net book value

47 024

172 655

2 855

3 950

226 484

. acquisitions through business combinations

3 043

4 003

27

46

7 119

. additions

139

4 978

269

42 318

47 704

. disposals

(94)

(23)

(45)

(162)

. depreciations

(4 497)

(29 119)

(858)

(34 474)

. translation adjustments

(48)

(86)

(1)

(1)

(136)

. other movements

1 080

5 596

486

(7 228)

(66)

At 31 December 2006

Gross value

99 742

397 605

18 452

39 085

554 884

Accumulated depreciation

(53 095)

(239 601)

(15 719)

(308 415)

Net book value

46 647

158 004

2 733

39 085

246 469

9

Capital expenditures are considerably higher compared to 2005 and reflect the investment programme in Bulgaria. In view of the current shortfall in refining capacity in Bulgaria, the company decided to build a new state-of-the-art copper refinery with an annual production capacity of 180,000 tonnes of cathodes. Works are proceeding as planned and the start-up of the new refinery is foreseen in the 2nd quarter of 2008.

As planned, a large proportion of the Integrated Pollution, Prevention and Control (IPPC) related capital expenditures has been spent during 2006.This investment will be completed in 2007.

There are no pledges on, or restrictions to, the title on property, plant, and equipment, as disclosed in note 31.

Management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. Management uses standard estimates based on a combination of physical durability and projected industry life cycles. Management will increase the depreciation charge where useful lives are shorter than previously estimated lives, or it will write-off or writedown technically obsolete or non-strategic assets that have been abandoned or sold.

18. Financial assets

(€ thousand)

Available-for- sale financial assets

At the end of the previous year

In December, Cumerio announced the sale of its 8.8% interest in Non Ferrous International nv (NFI). NFI is, through its operating subsidiaries Metallo-Chimique nv and Botrade, a leading European recycler of nonferrous metals and other materials, with operations

Total

20

13 763

13 783

(53)

(53)

20

13 710

13 730

. disposals At the end of the current financial year

Long-term loans granted

in Beerse, Belgium and Bilbao, Spain. In the context of the transaction, the non-secured subordinated loan facility granted by Cumerio will be fully repaid, including interests. The transaction is expected to be completed during March 2007.

19. Inventories

72

(€ thousand)

2006

2005

313 332

235 935

145

135

Consumables (gross value)

15 787

14 016

Write-downs

(3 592)

(3 294)

Base product with metal hedging (gross value) Base product without metal hedging (gross value)

Advances

5 190 330 862

Total inventories Inventories have increased by €84,070 thousand compared to December 2005, which reflects mostly the effect of higher copper prices.

Based on metal prices and currency exchange rates prevailing at the closing date, the value of metal inventories would be about €289 million higher than the current book value. However, most of these inventories cannot be realized as they are tied up in manufacturing and commercial operations.

246 792

the estimated costs of completion and the estimated cost necessary to make the sale). The actual selling prices and the costs still to be incurred may however differ from the expected amounts.

The IAS 39 bookings resulted in a reduction of €225 thousand of the value of hedged metal inventories which is reported as a write-down.

There are no pledges on, or restrictions to, the title on inventories.

Inventories per inventory type are written down to the expected net realizable value (estimated selling price less 20. Trade and other receivables Current 31/12/06

31/12/05

Trade receivables

190 666

136 665

Other receivables

41 356

43 131

Interest receivable

461

8

30

33 004

6 718

6 308

1 288

Total

271 795

187 810

(€ thousand)

Fair value gains on derivative financial instruments Deferred charges and accrued income

Trade and other receivables increased compared to the previous year reflecting also higher copper prices.

A securitization programme, compliant with the new

Notes

IFRS requirements, is in place since December 2005.

The notional amounts and the fair values of all financial instruments are disclosed in note 30.

21. Deferred tax assets and liabilities (â‚Ź thousand)

2006

2005

413

582

3 122

2 692

Current tax liabilities

(5 157)

(1 356)

Deferred tax liabilities

(3 563)

Current tax assets Deferred tax assets

Deferred tax in respect of each type of temporary difference

Assets

2006

2005

2006

2005

(757)

(4 191)

(753)

(210)

(370)

(198)

(347)

835

(10)

(14)

1 422

821

(898)

(169)

(898)

(88)

Property, plant, and equipment

107

Goodwill and intangible assets

12

23

1 432

Inventories

Liabilities

2005

2006

4 (4 298)

Provisions for pensions

81

Other adjustments

205

549

287

549

287

1 451

1 276

1 451

1 276

583

581

(112)

583

469

485

485

Deferred tax recognized directly into equity

1 399

2 239

(299)

(44)

1 099

2 195

Total tax assets/liabilities

5 534

6 016

(5 975) (3 323)

(441)

2 692

Deduction in respect of investment incentive Tax losses and other unused tax credits Non deductible provisions Amortization/depreciation/write off disallowance

Compensation of assets & liabilities within the same entity

(259) (1 857)

2 412

3 323

(3 563)

0

(441)

2 692

Net tax assets/liabilities

(441)

2 692

Net

Deferred tax assets are only recognized to the extent that their utilization is probable, i.e., if a tax benefit is expected in future periods. The actual tax results in

(2 412) (3 323)

(259) (1 652)

3 122

2 692

future periods may however differ from the estimate made at the time the deferred taxes are recognized.

22. Cash and cash equivalents 31/12/06

31/12/05

Short term investments: bank term deposits

(â‚Ź thousand)

32 114

55 701

Banks and cash in hand

37 809

35 466

Total cash and cash equivalents

69 923

91 167

Bank overdrafts (included in current financial debt in the B/S) Net cash and cash equivalents at the end of the current year All cash and cash equivalents are without restriction available to the company.

(80)

(30)

69 843

91 137

23. Consolidated statement of changes in shareholders’ equity

Notes Share Share Treasury

capital premiums shares (-) (€ thousand)

Balance at 1 January 2005 Change in accounting policies

3

Balance at 1 January 2005

74

Retained Fair value earnings & other reserves

181 220 31 282 80 086

4 337

Minority interests

Total

234 297 159

(93)

(93)

181 220 31 282 80 086

4 244

234 297 066

84 42 729

Profit for the period

42 645

Share-based payments - value of services rendered

Actuarial gains and losses recognized in equity

(2 266)

(2 266)

Fair value gains and losses recognized in equity

(8 004)

(7) (8 011)

Fair value gains and losses released from equity

(4 693)

3 (4 690)

Deferred taxes directly recognized into equity

2 370

1

2 371

Deferred taxes released from equity

1 466

1 466

Currency translation

17 489

Total income (expenses) recognized in equity 42 645

692

692

30 17 519

7 054

111 49 810

(7 710)

Balance at 31 December 2005

181 220 31 282 115 021 11 298

345 339 166

Balance at 1 January 2006

181 220 31 282 115 021 11 298

Dividends

(7 710)

345 339 166 (185) 72 314

Profit for the period

72 499

Share-based payments - value of services rendered

38

656

694

Actuarial gains and losses recognized in equity

27

(775)

(775)

Fair value gains and losses recognized in equity

1 994

6

2 000

Fair value gains and losses released from equity

6 910

10

6 920

Deferred taxes directly recognized into equity

188

(1)

187

Deferred taxes released from equity

(1 283)

(1) (1 284)

Currency translation

(11)

(2)

Total income (expenses) recognized in equity

0

0 72 537

7 679

(13)

(173) 80 043

Acquisition of treasury stocks

(4 978)

Disposal of treasury stocks

Dividends

(15 421)

(15) (15 436)

181 220 31 282 (4 544) 172 137 18 977

569 399 641

Balance at 31 December 2006

434

412

412

Change in scope

(4 978)

434

24. Share capital The subscribed capital of Cumerio amounts to €181,220,362. The authorized, not subscribed capital of Cumerio amounts to €18 million. Cumerio has 25,702,075 outstanding ordinary shares. Of these outstanding shares

244,000 treasury shares are held by the Company. Each share has a calculated par value of €7.05. All issued shares are fully paid.

25. Financial debts a. Movements of the period Non-current

(€ thousand)

Subordinated loans

76 145

76 145

1 907

4 578

6 485

124 735

124 735

At the end of the previous year . acquisitions through business combinations . increase . repayment . translation adjustments . change in fair value At the end of the current financial year

Total

Long-term bank loans

(76 242)

(76 242)

(40)

(40)

(193)

(193)

1 867

129 023

130 890

Current

(€ thousand)

Short-term bank loans

Bank overdrafts

Other loans

Total

30 333

30

47 412

77 775

1 144

1 144

. increase/decrease

25 628

51

(33 649)

(7 970)

At the end of the current financial year

55 961

81

14 907

70 949

At the end of the previous year . acquisitions through business combinations

b. Analysis by maturity date (€ thousand)

2007

2008

2009

After 2009

Total

Long-term bank loans

1 494

1 494

1 494

126 408

130 890

Financial debts (non current)

1 494

1 494

1 494

126 408

130 890

c. Analysis by currency

€ USD GBP

(€ thousand)

Other Total European currency

1 867

1 867

Long-term bank loans

124 542

4 481

129 023

Subtotal non-current financial debts

124 542

Subordinated loans

Bank loans Bank overdrafts Other loans Subtotal current financial debts Financial debts

6 348

130 890

55 961

55 961

81

81

633

6 211

8 063

14 907

56 042

633

6 211

8 063

70 949

180 584

633

6 211

14 411

201 839

The carrying amounts of the borrowings approximate their fair value, as the company’s financial debt is, except for the 7-year notes, generally subject to floating interest rates.

In July, Cumerio issued 7-year notes for an amount of €125 million in the form of a public offering in Belgium.

The notes have a coupon of 4.875%.The funds have been

used to consolidate the net working capital requirements and will provide additional means to finance future organic and external growth opportunities. Part of the interests has been swapped into floating, with a view to achieving a reasonable balance between fixed and floating interest rates.

26. Trade and other payables

Non-current

Deferred income from government grants

(€ thousand)

2006

2005

2 797

At the end of the previous year . subsidies granted . amounts recognized in operating income

22

(270)

(235)

(57)

406

2 470

2 797

. translation adjustments At the end of the current financial year

76

2 604

Current

31/12/06

31/12/05

266 882

226 876

Taxes payable other than income tax

2 303

925

Payroll and social security payables

9 266

9 705

Dividends payable

424

232

Other current payables

23 874

16 153

(€ thousand)

Notes

Trade payables

2 980

19

30

15 239

6 355

432

76

Total

321 400

260 341

Accrued interests payable Fair value losses on derivative financial instruments Accrued charges and deferred income

The notional amounts and the fair values of all financial instruments are disclosed in note 30.

27. Provisions for employee benefits In Belgium, Italy and Bulgaria, the group has various legal and constructive defined benefit obligations. In Belgium, the group has also a pre-retirement scheme.

Notes

(€ thousand)

Post Post Termination employment employment benefits early benefits, benefits & retirement pensions other & similar & similar

Other long term employee benefits

Total

At the end of the previous year

5 464

1 675

1 430

752

9 321

. increase / reversal (included in “Payroll and related benefits”)

1 562

139

374

(483)

1 592

. use (included in “Payroll and related benefits”)

(2 398)

(59)

(386)

(33)

(2 877)

. actualization (included in “Net Finance Cost”)

181

70

55

31

338

684

91

775

5 493

1 916

1 474

267

9 149

. recognized in equity

23

At the end of the financial year

(€ thousand) 31/12/05

Movements 2006

31/12/06

Belgium

5 343

(1 255)

4 088

Bulgaria

1 675

241

1 916

Italy

2 303

842

3 145

Total

9 321

(172)

9 149

The 2006 movements include the regular uses and increases for all entities.

The following disclosure requirements under IAS 19 amended were derived from reports from external actuaries on the existing benefit plans.

(â‚Ź thousand)

2006

2005

Change in defined benefit obligations (DBO) DBO at beginning of the year Current service cost

13 929

11 058

1 752

867

585

498

Actuarial gains and losses

1 092

3 177

Benefits paid

(637)

(1 672)

Curtailments

(624)

Interest cost

16 097

DBO at the end of the year

13 928

Change in plan assets Fair value of plan assets at beginning of year Expected return on assets

4 608

2 895

247

153

Actuarial gains and (losses)

(146)

953

Contributions by the employer

2 877

1 373

Benefits paid

(638)

(765)

Fair value of plan assets at end of year

6 948

4 609

101

1 106

Actual return on assets (â‚Ź thousand)

2006

2005

Reconciliation of present value with liability in the BS Present value of obligations wholly or partly funded

16 097

11 747

Fair value of plan assets of funds

(6 948)

(4 609)

Present value of obligations wholly unfunded

2 182

Total funded status

9 149

9 320

Liability in the balance sheet

9 149

9 320

Amounts recognized in the income statement of the year Service cost

1 752

867

Interest cost

585

498

(247)

(153)

464

145

Expected return on assets Amortization of actuarial losses (gains) Effect of curtailment and settlements

(624)

Total expense

1 930

The interest cost and expected return on plan assets are recognized under finance costs in the income statement (see note 14). All other elements of the expense of the year are classified under operating results. During the year 2006, Cumerio has set up its

1 357

own pension fund, which required a full funding at the start up. The benefit pay out structure of some long term benefit plans has been cost optimized, leading to a one time curtailment of the liability.

(â‚Ź thousand)

2006

2005

Amount recognized in statement of Recognized income and expense (SoRie) Actuarial gains and losses of the year

775

Cumulative actuarial gains and losses

2 407

141

Total recognized in SoRie

3 182

2 397

Actuarial assumptions

2006

2 256

2005

Discount rates (%)

4.29

4.31

Expected return on plan assets (%)

5.00

5.00

Expected rates of salary increase (including inflation) (%)

4.70

4.56

28. Provisions for other liabilities and charges

(€ thousand)

Provisions for other liabilities and charges

At the end of the previous year

5 050

. decrease

(4 254)

At the end of the financial year At the end of 2006, all provisions are non-current provisions, this reflects a litigation in Italy and the estimated expense for demolishing an old precious metals plant in Bulgaria.

796 The current provisions at the end of 2005 were provisions for onerous contracts and are part of the IAS 39 non compliance impacts (see chapter 2.22.1 on Transactional risks).

29. Notes to the cash flow statement Definitions The cash flow statement identifies operating, investing and financing activities for the period.

78

The indirect method was used for the operating cash flows. The net profit and loss is adjusted for: (€ thousand) Adjustments for non-cash transactions Share based payments Depreciation Write-down (back) on financial fixed assets

- the effects of non-cash transactions such as provisions, write-downs, etc., and the variance in working capital requirements.

- items of income or expense associated with investing or financing cash flows.

2006

2005

694

692

35 702

30 321

8 478

Inventories and bad debt provisions

478

383

Depreciation on government grants

(270)

(235)

Change in provisions

(5 201)

2 482

Total

31 403

42 121

Adjustments for items to disclose separately or under investing and financing cash flows

Tax charge of the period

10 267

15 085

Interest income

(2 450)

(1 692)

Interest charges

14 477

8 199

(168)

49

22 126

21 641

(Gain) loss on disposal of fixed assets Total Changes in working capital requirements represent the difference in inventories, trade, and other receivables and trade and other payables, where necessary restated for: - Write-downs and provisions for bad debts - Impact of changes in the scope of consolidation - Impact of currency translation differences - Impact of the mark-to-market of the cash flow hedge contracts Comments on the cash flow statement A) Net cash flow generated by operating activities

The 2006 operational cash flow is €78,877 thousand

lower than the comparable figure for 2005, reflecting a markedly improved operating performance which is more than offset by a sharp increase in working capital requirements of €98,629. Net working capital requirements were impacted during the year by the much higher metal prices and the increased deliveries of copper products.

B) Net cash flow used in investing activities

The increased net cash requirements from investing activities in 2006 reflect the capital expenditures in Bulgaria.

As planned, a large proportion of the Integrated Pollution, Prevention and Control (IPPC) related capital expenditures has been spent in 2006. Additionally, works regarding the

construction of a new copper refinery in Pirdop, Bulgaria, have started during the course of the year.

The Company has purchased a 51.3% interest in Swiss Advanced Materials (SAM), a company located in Yverdonles-Bains (Switzerland), involved in the production of complex copper profiles. In addition to the stake, the Company has also provided €1,864 thousand by way of a subordinated loan.

C) Net cash flow used in financing activities

In July, Cumerio issued 7-year notes for an amount of €125 million in the form of a public offering in Belgium.

The notes have a coupon of 4.875%.The funds have been used to consolidate the net working capital requirements and will provide additional means to finance future organic and external growth opportunities.

30. Financial instruments

(€ thousand)

Notional amount 31/12/06 31/12/05

Fair value 31/12/06 31/12/05

Total Forward commodities sold

375 786

84 162

20 002

(9 161)

Total Forward commodities bought

375 418

129 415

(2 800)

10 213

Total Forward currency contracts sold

225 996

113 833

8 555

31 868

Total Forward currency contracts bought

(179)

Currency option

75 758

910

Interest rate swap

62 500

(171)

(699) 10

Total Fair value

17 763

363

Recognized under trade and other receivables

33 004

6 718

Recognized under trade and other payables

(15 239)

(6 355)

Cumerio uses metal derivatives quoted on the London Metal Exchange and currency derivatives with well established brokers and banks to hedge its structural and transactional metal and currency risks.

and firm commitments. In the absence of hedge accounting documentation, as defined under IAS 39, these derivatives are measured as if they were held for trading, although none of these instruments is speculative in nature. The fair value on these derivatives is immediately recognized in the income statement under “Other operating income” for commodity instruments and under net finance cost for currency instruments.

Some of these derivatives qualify as dedicated hedges of the cash flows from committed or future forecasted transactions. The fair values of the effective hedging instruments are recognized in the fair value reserves in equity at the balance sheet date (see statement of income and expenses) and are released to the income statement when the underlying transactions occur.

Other derivatives are used to hedge transactional risks for metals and currencies, meaning existing transactions

When hedging the interest rate exposure from fixed rate borrowings, the company applies fair value hedge accounting. The changes in fair value of interest rate swaps and of fixed rate borrowings are recognized in the income statement within finance costs.

31. Off-balance sheet rights and commitments (€ thousand) - Guarantees given by the company on behalf of third parties - Guarantees received - Goods and titles held by third parties in their own names but at the company’s risk - Physical commitments for commodities purchased (to be received) - Physical commitments for commodities sold (to be delivered) - Goods and titles of third parties held by the company

1. Guarantees given by the company or its subsidiaries on behalf of third parties

31/12/05

3 719

2 603

40 639

67 782

2 499

17 361

94 408

60 381

176 013

97 203

30 448

37 022

347 726

282 352

4. Physical commitments

uarantees or irrevocable undertakings given by the G company or its subsidiaries in favour of third parties.

80

31/12/06

ommitments to deliver metals to customers or C receive metals from suppliers at fixed prices.

2. Guarantees received

5. Goods and titles of third parties held by the company or its subsidiaries

ledges and guarantees received guaranteeing the P satisfactory discharge of debts and existing and potential commitments of third parties towards the company or its subsidiaries, with the exception of guarantees and security in cash.

3. Goods and titles held by third parties in their own name, but at company’s or its subsidiaries’ risk

he goods and titles for which the company or its T subsidiaries bear the risk and take the profit or loss, but where these goods and titles are not present on the premises of the company or its subsidiaries. It concerns mainly inventories held under consignment or under tolling agreement by third parties.

32. Contingencies The group has no pending files that can be qualified as contingent liabilities or contingent assets, according to the definition of IFRS.

Goods and titles temporarily held by the company or its subsidiaries, but which are not owned by the company or its subsidiaries. It concerns mainly inventories held under consignment or tolling agreements with third parties.

33. Related party transactions The total gross amount of director fees granted to nonexecutive directors in respect of their 2006 activities amounted to €214,000. The total fees in connection with the Audit Committee and the Nomination and Remuneration Committee amounted to €62,000.

The stock option plan, set up in February 2006, relates to the Executive Committee for 162,000 options.

No loan or guarantees have been granted by the company to members of the Board or the Executive Committee.

For 2006, an aggregate gross amount of €2,589,454 has been foreseen for the seven members of the Executive Committee.

34. Earnings per share 31/12/06

31/12/05

Basic earnings per share

(€)

2.84

1.66

Diluted earnings per share

2.83

1.66

The following earnings figures have been used as the numerator in the calculation of basic earnings per share: (€ thousand) Net consolidated profit, Group share

31/12/06

31/12/05

72 499

42 645

The following numbers of shares have been used as the denominator in the calculation of basic and diluted earnings per share: For basic earnings per share:

2006

2005

Number of outstanding shares at 1 January

25 702 075

25 702 075

Number of outstanding shares at 31 December

25 458 075

25 702 075

Weigthed average number of outstanding shares

25 545 663

25 702 075

For diluted earnings per share:

2006

Weigthed average number of outstanding shares

25 545 663

Potential dilution due to stock option plan

99 266

Adjusted weigthed average number of outstanding shares

25 644 929

At 31 December 2006, Cumerio held 244,000 treasury shares.

35. IFRS developments Following new standards, amendments and interpretations to existing standards published that are mandatory for the accounting periods beginning on or after 1 January 2006 have not been early adopted by the group:

• IFRS 7, financial instruments: disclosures, • A complementary amendment to IAS 1, presentation of financial statements - capital disclosures (effective as of 1 January 2007).

Parent Company separate summarized financial statements The annual accounts of Cumerio nv/sa are given below in summarized form.

The annual accounts of Cumerio nv/sa, together with the management report and the statutory auditor’s report will be deposited with the National Bank of Belgium.

These documents can also be obtained via:

CUMERIO nv/sa Broekstraat 31 Rue du Marais 1000 Brussels (Belgium)

The statutory auditor did not express any reservations in respect of the annual accounts of Cumerio.

Summarized balance sheet (€ thousand) Fixed assets

82

31/12/06

31/12/05

324 877

321 563

II. Intangible assets

36

34

III. Tangible assets

161

134

324 680

321 395

11 794

7 049

VII. Amounts receivable within one year

4 296

6 039

VIII. Invested cash

4 295

IV. Financial assets Current assets

455

513

2 748

497

TOTAL ASSETS

336 671

328 612

Shareholders’ Equity

294 437

298 161

I. Capital

181 220

181 220

II. Share premiums

31 282

31 282

IV. Reserves

66 247

61 247

V. Profit carried forward

15 688

24 412

Provisions and deferred taxes

833

248

VII. Provisions for employee benefits

833

248

Creditors

41 401

30 203

IX. Amounts payable within one year

38 684

29 716

2 717

487

336 671

328 612

IX. Cash at bank an in hand X. Deferred charges an accrued income

X. Deferred charges and accrued income TOTAL LIABILITIES Summarized income statement (€ thousand)

2006

2005

I. Operating income

7 670

7 827

II. Operating charges

(11 182)

(7 530)

III. Operating profit (loss)

(3 512)

297

IV. Financial income

17 968

1 281

V. Financial charges

(3 644)

(1 065)

VI. Current profit (loss)

10 812

513

VII. Extraordinary income

3 265

VIII. Extraordinary expense

(7 518)

XI. Profit (loss) for the year

14 096

(7 005)

XIII. Profit (loss) for the year

14 096

(7 005)

Appropriation account (€ thousand)

2006

2005

A. Profit (loss) to be appropriated

7 091

47 544

1. Profit (loss) for the financial year

14 096

(7 005)

2. Profit (loss) carried forward

(7 005)

54 549

C. Appropriation to equity

(5 000)

2. To the legal reserve 3. To the reserve for own shares

705 4 295

D. Profit (loss) to be carried forward

(15 688)

(24 412)

1. Profit (loss) to be carried forward

(15 688)

(24 412)

F. Profit to be distributed

(17 821)

(23 132)

17 821

23 132

1. Dividends STATEMENT OF CAPITAL

(€ thousand)

Number of shares

A. Share capital

1. Issued capital

At the end of the preceding financial year

181 220

25 702 075

At the end of the financial year

181 220

25 702 075

181 220

25 702 075

2. S tructure of the capital

2.1. Categories of shares

2.2. Registered shares or bearer shares

Ordinary shares

Registered

Bearer

55

7 802

181 165

25 694 273

1 720

244 000

C. Treasury shares

1. Held by the parent company

E. Authorized unissued capital

18 000

(€ thousand) G. Shareholder base*

Number of shares

Lansdowne Partners, 15 Davies Street, London W1K 3AG, UK

6.76

1 737 024

Schroders Investment Management, 31 Gresham Street, London EC2V 7QA, UK

3.57

916 662

3.01

774 791

East Side Capital, Wilmington, Delaware 19801 US joined with Margate Capital, George Town, Cayman Islands Others

86.65

22 273 598

100.00

25 702 075

100%

25 702 075

of which free float * for the declaration date please refer to the section Investor Relations

Brussels, 20 February 2007 The Board of Directors

Corporate Governance

On 9 December 2004, the Belgian Code on Corporate Governance, the so-called “Code Lippens”, was published. It sets out a series of principles, provisions, and guidelines for listed Belgian companies in order to reinforce the transparency and accountability of their management.

In line with these principles, Cumerio’s charter focuses on how the company applies the Code, the criteria for independence of its directors, insider trading, and market manipulation. The charter is also considered to be an essential element in Cumerio’s stated goal of achieving sustainable development.

Last year, the annual report focused on the implementation of the Corporate Governance principles within Cumerio. This year, it primarily deals with key information and events of 2006 as well as new initiatives taken to improve compliance with the charter and all prevailing regulations and directives. It was in this context

that the Board of Directors approved the Code of Ethics during 2006. This provides an additional cornerstone for Cumerio to manage its business in a sustainable manner.

The complete Corporate Governance charter, including the Code of Ethics can be found on the Cumerio Web site.

Board of Directors Composition At the Cumerio General Shareholders Meeting of 27 April 2006, Thomas Leysen was elected as an additional non-executive member of the Board. More details about Mr. Leysen can be found in the section “Board of Directors”.

86

The Cumerio Board is now composed of eight directors: Karel Vinck, Chairman of the Board; Etienne Davignon, Vice-Chairman; Philippe Delaunois, Etienne Denis, Thomas Leysen, and Remi Vermeiren as non-executive directors and Luc Delagaye and Michel Moser as executive directors.

All non-executive Board members are independent, in accordance with the criteria established by the Board of Directors.

There are no contractual relationships, either directly or indirectly, between the non-executive members of the Board and Cumerio.

Functioning

Audit Committee

The Board held five meetings during 2006. In order to comply with the very strict timing of the public offering, in the context of the notes issue in July 2006, the Board also adopted two circular resolutions.

The Audit Committee consists of three members, all non-executive directors. The Chairman of the Committee is Remi Vermeiren; the other members are Etienne Davignon and Philippe Delaunois.

Attendance by Board members has reached a rate of 92.14%.

The Chairman receives €6,000 per meeting attended, a member €4,000.

During the period under review, no decision or transaction has given rise to a possible conflict of interest, with the exception of the decision on the 2006 stock option plan. Executive directors Mr. Delagaye and Mr. Moser were among the managers to which options have been granted. They did not participate in the voting with regard to this topic.

The Audit Committee held three meetings in the course of the year.

Besides its usual activities in the context of the review of the accounts, the committee has conducted - in close collaboration with management and external consultants - a risk management review including an in-depth risk mapping. This resulted in an action plan aimed at improving the handling of risks within the group.

Board Committees In accordance with their charter, certain specific duties are entrusted to an Audit Committee and a Nomination and Remuneration Committee respectively.

The detailed charter for the Audit Committee can be consulted on the Cumerio Web site.

Nomination and Remuneration Committee The Nomination and Remuneration Committee consists of three members, all non-executive directors. It is chaired by the Chairman of the Board, Karel Vinck; the other members are Etienne Davignon and Philippe Delaunois.

The Chairman receives €4,000 per meeting attended, a member €3,000.

A detailed description of the mission can be found on the Cumerio Web site.

The Committee held two meetings in 2006. It reviewed the performance of the Executive Committee and the Board of Directors.

Compensation

activities for the company amounted to €214,000. Of this, €62,000 of the total fee was in connection with the Audit Committee and the Nomination and Remuneration Committee activities.

The total gross amount of director fees granted to non-executive directors in respect of their 2006

Executive directors are not granted director fees.

No variable or other compensation

Name

Karel Vinck Etienne Davignon Luc Delagaye Philippe Delaunois Etienne Denis Thomas Leysen* Michel Moser Remi Vermeiren

Attended Board meetings 5 5 5 4 5 3 5 3

Attended Committee meetings 2 5 - 5 - - - 3

element is associated with directorship. No loan or guarantees have been granted by the company to members of the Board.

Total remuneration (€) 64 000 46 000 - 44 000 - 18 000 - 42 000

Shares held at 31/12/06 20 000 1 050 315 9 000 25 000 -

* joined the Board as per 28 April 2006

the Executive Committee Composition and functioning The function of Chief Executive Officer (CEO) is entrusted to Luc Delagaye. His role is essentially to steer the strategic direction of the company in the long-term. The CEO also chairs the Executive Committee. The latter provides assistance to the CEO in the management of Cumerio.

€ Basic remuneration Variable remuneration Pension schemes and insurance

Since 1 April 2006, Patricio Barrios, a Spanish national, has been a member of the Executive Committee and has assumed the duties of Vice-President Operations.

izing the company to prepare it for future challenges in terms of strategic developments and investments.

As of 31 December 2006, the Executive Committee consisted of seven members.

For 2006, an aggregate gross amount of €2,589,454 has been granted to the seven members of the Executive Committee, of which €644,385 went to the CEO as remuneration and other benefits.

The Executive Committee met a total of 24 times during the year and held two executive seminars. Besides the operational management, the meetings focused mainly on organ-

CEO 281 699 243 564 119 122

Compensation

Other Executive Committee members 1 053 263 425 227 466 579

The variable remuneration covers a bonus scheme and a variable pension contribution. It ranges from zero to 92.4% of the fixed component in case all target results are exceeded at a maximum.

Targets are linked to individual performance and to the overall group’s Return on Capital Employed.

The CEO and the members of the Executive Committee benefit from an extra-legal pension package complemented with a death, disability, and hospitalization coverage at the expense of the company.

88

A stock option plan has been set up this year for the company’s senior management. In total, 162,000 stock options were granted to the Executive Committee, of which 94,500 were to the CEO. The exercise price is €18.24 and the options can be exercized until 20 February 2013.

General assemblies Two general assemblies, an ordinary and an extraordinary, took place on 27 April 2006. During the Extraordinary General Assembly, Cumerio received the authorization to purchase up to 10% of its own shares.

The total number of shareholders attending or represented at the Ordinary General Assembly was 33. They represented 3.27% of the outstanding shares. At the Extraordinary General Assembly, 27 shareholders or 9.43% of the outstanding shares, attended or were represented.

The General Assembly is considered a key moment in the corporate communication with shareholders.

In that regard, this year’s assembly spent some time on the strategic developments within Cumerio (presented by Mr. Delagaye), as well as on the specific role of the Audit Committee (outlined by Mr. Vermeiren).

Supervision and compliance Regulatory supervision Cumerio falls under the listing requirements of Euronext Brussels.

Furthermore, it is also subject to supervision by the Belgian Banking, Finance, and Insurance Commission.

Compliance with the “Insider dealing and market manipulation” Directive Cumerio has adjusted its rules regulating any transaction in Cumerio shares or related financial instruments, in accordance with the new requirements of the Belgian legislation, specifically in the context of reporting transactions to the Belgian Banking, Finance, and Insurance Commission.

More information on Cumerio’s policy is available on the Web site.

The secretary of the Board of Directors acts as Compliance Officer.

All directors and members of the Executive Committee shall report every six months on any Cumerio shares and financial instruments relating to Cumerio shares acquired or disposed of during that period.

Compliance with the Code of Ethics A decision to enact a Code of Ethics was taken at the Board meeting of 23 November 2006. It describes the values that Cumerio adheres in a view of conducting its business in a sustainable way.

The Code deals among others with the following principles: • Personal conduct and equal opportunities for all employees at Cumerio • Potential conflicts of interest including the issue of bribes, gifts, and favours • Relationships with competitors, suppliers, or any other business associate • Compliance with laws and regulations.

The complete Code of Ethics can be found on the Cumerio Web site. It is applicable to all employees, managers.

Statutory auditor The appointment of Pricewaterhouse Coopers as statutory auditor was approved at the Ordinary General Assembly of 22 June 2005. This appointment shall last for three years, ending at the General Assembly that approves the 2007 accounts.

Cumerio has applied strict principles regarding the independence of the company auditor. This policy outlines the duties and responsibilities of the company and the auditor regarding independence, the exclusion of certain non-audit services, and the monitoring of the auditor’s remuneration.

The fees paid to PricewaterhouseCoopers with respect to the statutory audit of Cumerio nv/sa, its subsidiaries and the consolidation of the Cumerio group amounted to €352,098 for 2006 of wich €77,600 relates to activities in the context of the 2005 accounts.

The Audit Committee has granted a specific mission to Pricewaterhouse Coopers regarding the re-engineering of the treasury management of the company. The remuneration for this project is in line with the new provisions in the company code.

A fee amounting to €105,407 has been granted in the context of this mission.

DIVIDENDS If the appropriation of profit proposed is approved, a gross dividend of €0.70 per share will be paid for the financial year 2006 representing:

Content

2

Key figures

4

Strategy

6

Key profitability drivers

8

Copper market

10

Copper Refining

12

Copper Products

16

Sustainability

20

Investor relations

32

Executive Committee

36

Board of Directors

38

Financial review

40

Glossary financial definitions

42

Financial statements

44

Corporate governance

85

Listing

Realization, Concept and lay-out

This English version is the basic version. This report is also available in French and Dutch.

The Crew Central Gate 7th floor Cantersteen 47 1000 Brussels - Belgium T : +32 2 504 00 00 F : +32 2 657 30 49 info@thecrewcommunication.com www.thecrewcommunication.com

Internet

editing

The full report can be downloaded on www.cumerio.com

Forte cvba Effective Industrial Marketing Voskenslaan 97d 9000 Gent - Belgium T : +32 9 244 76 76 F : +32 9 244 76 75

Eurolist on Euronext Brussels

• a net dividend of €0.525 after deduction of a 25% withholding tax on presentation of coupon n° 3 • a net dividend of €0.595 after deduction of a 15% withholding tax on presentation of coupon and VVPR strip n°3.

Annual report

From 27 April 2007 on, payment of dividends on presentation of coupon n°3, and VVPR strip if applicable, at the registered offices and branches of the following institutions :

• Fortis Bank • ING • Bank Degroof • Dexia Bank • KBC Bank • Petercam

Message to the shareholders

ADDITIONAL INFORMATION

Registered Office Cumerio Broekstraat 31 Rue du Marais 1000 Brussels - Belgium T : +32 2 227 12 22 F : +32 2 227 12 01 www.cumerio.com info@cumerio.com Company Number: 0401574852 VAT nr: 873.533.993

Publisher responsible at law Cumerio Media & Investor Relations Frank Vandenborre

Photographs Benny De Grove www.benny-degrove.com Courtesy of LME

Printing JNP Printing

LOOKING FORWARD

annual REPORT 2006

annual REPORT 2006

Cumerio Broekstraat 31 Rue du Marais 1000 Brussels, Belgium T : +32 2 227 12 22 F : +32 2 227 12 01 info@cumerio.com www.cumerio.com

E