Shares and shareholders

Bekaert share in 2009

Our approach

Bekaert is committed to providing high-quality financial information to its shareholders. Clarity and transparency are not empty words and it is Bekaert’s intention to engage constantly in an open dialogue with its shareholders.

Bekaert has always chosen to respond promptly to new international standards. The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), which have been adopted by the European Union.

By creating value for the customer, Bekaert also creates value for shareholders and other stakeholders. Both private and institutional investors benefit from our sustained commitment to transparent reporting, be it at shareholders’ or analysts’ meetings. As a consequence, our shareholders have become more and more international.

Share identification

The Bekaert share is listed on NYSE Euronext Brussels as ISIN BE0003780948 (BEKB) and was first listed in December 1972. The VVPR strip is listed as ISIN BE0005569406 (BEKS). The ICB sector code is 2727 Diversified Industrials.

Bekaert share in 2009

The year 2009 commenced with a sharp decline in line with the trend of previous year. The volatility in the financial markets remained extremely high. Valuations became very cheap in the first months of 2009 and there was no view on a short-term recovery. On a worldwide scale orders decreased, the pipeline of inventories dropped to a bare minimum, giving rise to a sharp decrease in activity in the industry. The share started the year at a price of € 49.21 and slipped to € 37.25 on 24 February, the lowest price since April 2003, and far below the equity value. The financial markets recognized the challenges facing Bekaert in 2009 and rated the share accordingly.

The banks’ restrictive credit policies shifted attention to the debt structure and businesses’ refinancing options. Supported by its strong balance sheet structure and the issue of bonds worth € 300 million in the first quarter, Bekaert remained fairly unscathed by this problem.

Later on, the first green shoots started to show and indicated a slowdown of the recession. The stock market turned and the Bekaert share showed a strong outperformance of the BEL20 index, by increasing by more than 80%. The March announcement of strong 2008 results and the change in sales mix, geographically as well as by product mix, supported the positive view on Bekaert. This was the basis of a rise in the share price until May, which then hovered around € 70 until July.

The decline in industrial production and the monetization of inventories were partially reversed. Several governments, the Chinese government in particular, announced steps to counter a global slowdown. Whilst China was leading the global recovery, the economic prospects of the different emerging countries varied widely depending on the economic policies that had been in place since the beginning of the crisis. China chose to boost investments and, together with India, it succeeded in averting a serious economic downturn, while the Russian economy was likely to contract significantly. The Latin American indicators suggested that the economy there was to continue to perform well from August onwards. With European stimulus policies being less pronounced than in the U.S., the EMEA region was likely to underperform the U.S. economy and to fall short of pre-crisis levels. This macro-economic environment proved the assumption that emerging countries, especially China, were very helpful to overcome the crisis. As a consequence, investors began to recognize that the Bekaert strategy of moving into the emerging countries could have been the right one.

The first half-year results 2009 were presented in July. Due to its increased geographic presence, Bekaert had decided to change its segment reporting. The geographic segmentation corresponds to the company’s global presence and growth strategy. This segmentation was considered by the financial markets as a major improvement and, for the first time, provided investors with insight into the result breakdown per region, thus enabling them to better evaluate the nature and financial effects of the business. The geographic split clearly showed the crucial role of the Asian activities. The high profitability in this region proved the better-than-expected resilience of Bekaert in a turbulent economic environment.

The half-year results were better than expected. A substantial drop in raw material prices had a one-off effect on the results, hiding at first sight the underlying quality. Bekaert reached a 7.2% REBIT margin over the first half of the year, and based on this performance, the share appeared on the radar screens of investors focusing on Asia. The share price started to increase again, reaching almost € 100 in September.

Bekaert released an encouraging trading update for the third quarter, driven by the high-margin sales in emerging markets and a very healthy cash flow generation and reduced net debt. Solid sales volumes were expected for the fourth quarter on the back of continuing strong demand in the emerging markets and a gradually improving trend in the mature markets. Moreover, the development of wire rod prices was stable, indicating that there was not a second hit into the results of 2009. All this resulted in a share price high of € 109.40 on 30 December 2009.

On 31 December 2009, the share traded at € 108.50. The highest target price in 2009 amounted to € 127. In late December, Bekaert confirmed its membership in the BEL20, the Belgian reference index.

Capital structure and dividend

Capital structure

As of 31 December 2009 the registered capital of NV Bekaert SA amounts to € 175 118 000, and is represented by 19 834 469 shares without par value. The shares are in registered, bearer or non-material form.

The number of VVPR strips is 4 058 470.

The total number of outstanding subscription rights under the SOP1 and SOP 2005-2009 stock option plans is 313 784.

A total of 50 844 subscription rights were exercised in 2009 under the SOP1 1999-2004 and SOP 2005-2009 employee stock option plans, resulting in the issue of 50 844 new NV Bekaert SA shares and VVPR strips, and an increase of the registered capital by
€ 450 000 and of the share premium by € 2 536 636.71.

Bekaert neither purchased nor cancelled any own shares in 2009. Of the 55 000 treasury shares held as of 31 December 2008, an aggregate 25 100 shares were delivered to the individuals who had exercised their options under the SOP2 stock option plan in 2009. The remaining 29 900 shares are held as treasury shares as of 31 December 2009. As a result of those movements, the number of issued shares and the number of VVPR strips each increased by 50 844.

In 2009 a fourth issue of subscription rights took place under the SOP 2005-2009 stock option plan: 96 050 subscription rights were issued to members of the Bekaert Group Executive, senior management and senior executive personnel. Each subscription right is convertible into one newly issued NV Bekaert SA share with VVPR strip at an exercise price of € 49.98. A fifth and final offer of 97 800 subscription rights was made on 17 December 2009. Each subscription right of the fifth series is convertible into one newly issued NV Bekaert SA share with VVPR strip at an exercise price of € 101.97. An aggregate 303 886 subscription rights had been granted under the SOP 2005-2009 stock option plan as of 31 December 2009.

An aggregate 21 500 options were granted under the SOP2 stock option plan in 2009: each option will be convertible into one existing NV Bekaert SA share with VVPR strip at an exercise price of € 49.98. A new offer of 16 500 options was made on 17 December 2009. Each option of this series is convertible into one existing NV Bekaert SA share with VVPR strip at an exercise price of € 101.97. A total of 137 920 options had been granted under the SOP2 stock option plan as of 31 December 2009.

The SOP 2005-2009 and SOP2 plans comply with the Act of 26 March 1999.

Detailed information about capital, shares and stock option plans is given in the Financial Review (Note 6.11 to the consolidated financial statements).

Bekaert’s dividend policy

It is the policy of the Board of Directors to propose a profit appropriation to the General Meeting of Shareholders which, insofar as the profit permits, provides a stable or growing dividend while maintaining an adequate level of cash flow in the company for investment and self-financing in order to support future growth. In practice, this means that the company seeks to maintain a pay-out ratio of around 40% of the result for the period attributable to the Group over the longer term.

Appropriation of available profit

In the light of the company’s strong performance in 2009 and its confidence in the future, the Board of Directors will propose that the General Meeting of Shareholders approve the distribution of a gross dividend of € 2.940 per share. If this proposal is accepted, the net dividend per share will be € 2.205, and the net dividend on shares with VVPR strip, thereby reducing the withholding tax to 15%, will be € 2.499 per share.

General Meetings of Shareholders

The Annual General Meeting was held on 13 May 2009. An Extraordinary General Meeting was held on the same day. A Special General Meeting took place on 15 April 2009. The resolutions of the three meetings are available at www.bekaert.com.

More detailed information is available in the Bekaert Shareholders’ Guide 2009 and on www.bekaert.com

Share performance against stock indices

Volumes traded

The average daily trading volume was about 72 000 shares in 2009, the same level as in 2008. The volumes were high in the first

half of the year but slowed down in the third and fourth quarter. The volume peaked on 19 June at 392 000. As a reference, in 2001 only 18 000 shares were traded per day.

Bekaert versus Bel20, NEXT100 and NEXT150 (2009)

Until March the share performed broadly in line with the market indexes. The March announcement of strong 2008 results and the change in sales mix, both geographically and by


product mix, was the sign for outperforming all the benchmark indexes. The share more than doubled compared to its year low in February. The BEL20 index has increased by 30% since January, while the Bekaert share has increased by 120%.

Internationalization of the shareholder structure and significant participations

The shareholder structure showed a strong internationalization in previous years and this trend was continued in 2009. The United Kingdom in particular, but also France and Asia, have taken a larger stake.

In connection with the entry into force of the Act of 2 May 2007 on the disclosure of significant participations (the Transparency Act) Bekaert has in its Articles of Association set the thresholds of 3% and 7.50% in addition to the legal thresholds of 5% and each multiple of 5%. An overview of the current notifications of participations of 3% or more can be found in the Financial Review (Parent company information: interests in share capital).

The principal shareholders own 39.01% of the shares, while two international institutional investors hold more than 3% of the shares each. Bekaert has 103 registered shareholders who represent a combined total of 2.9%.

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