ANNUAL REPORT ‘08 PROFILE OF THE CIMPOR GROUP CIMPOR is an international cement Group - ranked among the world’s top ten - with head office and decision centre in Portugal. At the end of 2008 the Group was operating in thirteen countries spread over four continents, managing an installed cement production capacity of 31.1 million tonnes/year (employing its own clinker). The Group’s core business is the production and sale of cement. It is the domestic market leader in Portugal, Cape Verde and Mozambique. Concrete, aggregates and mortars are produced and sold as a consequence of vertical integration of the businesses. These products generated a consolidated turnover of EUR 2.089 billion in 2008. STRATEGIC VISION The CIMPOR Group, as a pioneer in the concept of sustainable development and one of the world’s main players in the movement towards consolidation of the sector, aims to continue on the path of growth and internationalization, remaining loyal to that concept whilst maintaining its independence from other large cement producers and keeping its decision centre in Portugal. VALUES • Shareholders – To defend their legitimate interests through the intrinsic appreciation of the capital invested in the company and its adequate return. • Clients – Focus on full satisfaction of clients’ expectations, in accordance with the ethical principles of integrity and compliance with the applicable standards. • Personnel – Fair remuneration for their work, with career advancement opportunities and fair treatment by fostering an active policy of respect for good standards of hygiene, health and safety at in the workplace. • Organization – Constantly striving for excellence by setting ambitious goals and selecting leaders at all levels of the organization that are able to shoulder responsibility and meet these goals. • Quality – Compliance with national and international standards, with particular reference to product certification and the smooth running of the Quality Management System. • Environment – Harmonious integration into the social and cultural surroundings, based on an active policy of environmental protection and cooperation with local communities. • Innovation – Pursuit of a policy of innovation and the development of technologies, products and services in collaboration with the academic and scientific community, clients and suppliers. • Local Communities - Implement a policy of social support considering the shortfall at the local level in terms of infrastructures and support to social and cultural activities. • Society in General - Pursue communication and corporate social responsibility policies that are wholly transparent in regard to the Group’s undertakings and which demonstrate its proactive adoption of civic responsibilities. STRATEGY • To consolidate current positions through internal growth (increased efficiency and capacity) and greater penetration in markets where the Group already operates (through expansion into business areas related to the cement sector). • To make new acquisitions within the Group’s financial limits, seeking to ensure balance between operations focused on emerging markets and the Group’s presence in consolidated and mature markets, where the lower potential for growth is offset by lower risk. • Optimize operations by taking advantage of synergies, cutting costs (particularly energy costs), increasing employee productivity and investing in R&D. • To develop trading between the Group’s companies so as to balance demand peaks in certain markets with excess supply in others. CIMPOR - CIMENTOS DE PORTUGAL, SGPS, S.A. │ GROUP ANNUAL REPORT ‘08 KEY FINANCIALS Consolidated Data Unit 2008 2007 Change 2006 Installed Capacity (Cement) (1) 103 ton 31,070 28,360 9.6 % 24,115 Group Sales Cement and Clinker 103 ton 26,807 24,547 9.2 % 20,445 Concrete 103 m3 8,567 8,664 -1.1 %6,943 Aggregates 103 ton 16,109 15,196 6.0 % 12,987 Mortar 103 ton 562 543 3.4 % 485 Turnover 106 euros 2,088.9 1,966.1 6.2 % 1,638.9 Payroll Expenses 106 euros 224.9 207.1 8.6 % 173.2 Operating Cash Flow (EBITDA )106 euros 586.3 607.0 -3.4 % 563.0 Operating Income (EBIT)106 euros 392.6 438.1 -10.4 % 408.1 Financial Income (net) 106 euros -134.4 -48.0 s.s. -42.3 Current Income 106 euros 258.3 390.1 -33.8 % 365.8 Net Income after Minority Interests 106 euros 219.4 304.1 -27.8 % 291.9 Total Assets 106 euros 4,615.3 4,834.0 -4.5 % 3,857.8 Shareholders' Equity 106 euros 1,505.1 1,796.4 -16.2 % 1,579.7 Minority Interests 106 euros 110.7 102.9 7.6 % 74.1 Net Financial Debt (2) 106 euros 1,862.6 1,359.3 37.0 % 865.6 Capital Employed 106 euros 3,382.5 3,214.6 5.2 % 2,547.1 Capital Invested 106 euros 3,703.2 3,498.4 5.9 % 2,763.0 Employees (31 Dec) units 8,369 7,608 10.0 % 5,950 Turnover / Employee 103 euros 256.5 279.5 -8.2 % 279.3 Value Added / Employee 103 euros 99.6 115.7 -13.9 % 125.5 Net Investment Goodwill (Subsidiaries) 106 euros 166.6 332.9 -49.9 % 14.5 Tangible Fixed Assets 106 euros 423.7 498.8 -15.1 % 166.1 Operating CF / Turnover (EBITDA Margin) 28.1% 30.9% 34.4% Operating Income / Turnover (EBIT Margin) 18.8% 22.3% 24.9% Return on Equity (ROE ) 13.3% 18.1% 18.9% Return on Equity Employed (ROCE ) (3) 10.4% 11.6% 13.1% Net Financial Debt / Capital Invested 50.3% 38.9% 31.3% Market Capitalization (31 Dec) 106 euros 2,339 4,032 -42.0 % 4,227 Earnings per Share (EPS ) euros 0.33 0.45 -27.4 %0.44 Price (31 Dec) / Price Earnings Ratio (PER) 10.6 13.2 14.4 (1) Annual capacity of ccement production w ith ow n clinker (31 Dec) (2) Loans Contracted (including Leasing and Added Costs deriving from Financial Debt) - Liquid assets, Tradable securities and other Financial Applications (3) Adjusted Operating Income (net of Cash Taxes) / Capital Employed CIMPOR - CIMENTOS DE PORTUGAL, SGPS, S.A. │ GROUP ANNUAL REPORT ‘08 106 euros Turnover EBITDA / EBITDA Margin 106 euros 2 089 2200 1 966 1000 40.0% 2000 34.4% 900 1800 1 639 30.9% 800 28.1% 1600 30.0% 700 1400 607 586 1200 600 563 1000 500 20.0% 800 400 600 300 10.0% 400 200 200 100 0 0 0.0% 2006 2007 2008 2006 2007 2008 Operating Income (EBIT) / Net Income after Minority Interests 106 euros EBIT Margin 106 euros 800 30.0% 350 24.9% 700 292 304 22.3% 300 600 18.8% 20.0% 250 219 500 438 408 393 200 400 150 300 10.0% 200 100 100 50 0 0.0% 0 2006 2007 2008 2006 2007 2008 Capital Employed Net Financial Debt 106 euros 106 euros 4000 2000 1 863 3 383 3500 3 215 1750 3000 2 547 1500 1 359 2500 1250 2000 1000 866 1500 750 1000 500 500 250 0 0 2006 2007 2008 2006 2007 2008 Return on Capital Employed (ROCE) Return on Equity (ROE) 16.0% 25.0% 14.0% 13.1% 18.9% 11.6% 20.0% 18.1% 12.0% 10.4% 10.0% 15.0% 13.3% 8.0% 6.0% 10.0% 4.0% 5.0% 2.0% 0.0% 0.0% 2006 2007 2008 2006 2007 2008 CIMPOR - CIMENTOS DE PORTUGAL, SGPS, S.A. │ GROUP ANNUAL REPORT ‘08 CORPORATE HIGHLIGHTS • The CIMPOR – Cimentos de Portugal, SGPS, S.A., Annual General Meeting was held on 9 May 2008, which besides approving all the proposals submitted by the Board of Directors, elected a new alternate member of the Audit Committee for the period to the end of the current term of office of said Committee (2005-2008). • The CIMPOR Group enters the Indian market through the acquisition by Cimpor Inversiones, S.A. of 73.6% of the share capital of the company Shree Digvijay Cement Company Limited, listed on the Bombay Stock Exchange, for the total sum of approximately EUR 73.5 million. Portugal • Disposal by Cimentaçor – Cimentos dos Açores, Lda. of all the shares representing the share capital of Betaçor – Fabrico de Betão e Artefactos de Cimento, S.A.. • Exercise of the purchase option held by Cecisa – Comércio Internacional, S.A. to buy 80% of the share capital of Cecime – Cimentos, S.A. and the subsequent raising of this share capital from EUR 1,247,000 to EUR 6,300,000. • Acquisition by Cimpor – Indústria de Cimentos, S.A. of 50% of the share capital of Teporset – Terminal Portuário de Setúbal, S.A.. • Acquisition by Agrepor Agregados – Extracção de Inertes, S.A., of 95% of the share capital of Sogral – Sociedade de Granitos, S.A.. • Liquidation and winding up of Cimpor Investimentos, SGPS, S.A., of Inergranitos, S.A., and of Betrans – Sociedade Produtora e Distribuidora de Betão Transmontano, S.A.. • Merger and incorporation of Cimpor Betão, SGPS, S.A. into Cimpor Portugal, SGPS, S.A.. • Increase to the share capital of Mossines – Cimentos de Sines, S.A., in EUR 10 million. • Increase to the share capital of Cimpor Imobiliária, S.A., in EUR 15.5 million. • EUR 2.2 million increase to the stake held by Cimpor – Indústria de Cimentos, S.A. in the “Luso Carbon Fund” Closed Special Mutual Fund. • Start of the process of recovering hazardous industrial waste at the Souselas plant and attainment of the construction licence required to implement the project to carry out the recovery of ordinary industrial waste at the Loulé plant. • Award to Cimpor – Indústria de Cimentos, S.A., of certification of its Occupational Health and Safety Management System according to the OHSAS 18001 standard. CIMPOR - CIMENTOS DE PORTUGAL, SGPS, S.A.